CleanPowerSF Sfpuc Commission
February 11, 2025

Nikolai J. Sklaroff,
Capital Finance Director
February 11, 2025
Water and Power Enterprise Interim
Funding Program Credit Facilities
Agenda
• Interim Funding Programs
• Water Credit Facility Amendment and New
Credit Facilities
• Series A-1(Amend), A-4 (New)
• Power Credit Facilities
• Series A-3 (New)
• Commission Authorization
2 3
Interim Funding Programs
• General Overview of Interim Funding Program was
provided during January 14, 2025, Commission
Meeting
o In summary, the Interim Funding Program provides a cost- efficient means of releasing capital appropriation on
Controller's Reserve, a means of funding capital needs by only borrowing debt as needed through issuance of
Commercial Paper or borrowing on revolving lines of credit, and a means of aggregating borrowing needs until long-term bonds are issued
• This presentation combines approval of two facilities for the Water Enterprise under one resolution and one
facility for the Power Enterprise under a separate
resolution. We will return for approval of two additional facilities for each enterprise at the February 25th
meeting.
4 Interim Funding Program
(Water Enterprise)
• Authorized for $500 million previously
• $250 million of Additional Authorization Approved by
Commission, BOS and Mayor Effective December 25, 2024
• Existing Facilities: three series ($400 million) for Commercial Paper (CP); one ($100 million) for Revolving Credit Line:

Series
Amount
($millions) Credit Facility Bank Facility Type
Expiration
Date
A-1 100 Sumitomo Mitsui Bank Letter of Credit 5/16/25
A-2 200 Sumitomo Mitsui Bank Letter of Credit 6/14/27
A-3 100 Barclay’s Bank Letter of Credit 7/15/27
R-1 100 US Bank Revolving Credit
Agreement
7/16/27
$500 Subtotal: Existing Facilities Under Prior Authorization 250 Unutilized New Authorization
$750 Total Program Authorization
5 Solicitation of Credit Facilities
• SFPUC and its municipal advisors, Backstrom McCarley
Berry & Co., LLC conducted a competitive solicitation
for credit facilities for additional Water interim
funding facilities, a replacement for an expiring Water facility, as well as for additional Power interim
funding facilities.
• The SFPUC solicited bids from the City’s pre-qualified pool of credit providers (currently maintained by the
Airport Commission) and received responses from
seven banks, including banks new to the SFPUC's credit
portfolio
• Following evaluation of the proposals, and successful negotiation of terms with the selected providers, Staff recommends the following proposed credit facilities.
6 Amended & New Credit Facilities
(Water Interim Funding Program)
• Staff recommends the following proposed credit facilities for the Water Interim Funding Program:

Expiring Facility Expiring Fee Proposed
Facility
Proposed Fee
(Level 1) Tenor
Short-Term
Bank
Ratings
A-1, Sumitomo
Mitsui Bank
Corp Letter of
Credit ($100
million)

0.33%
A-1, Sumitomo
Mitsui Bank Corp.

Letter of Credit
($100 million)

0.32% or
approx. $355k
per year
5 years
P-1, A-1,
and F1
n/a n/a
A-4, PNC Bank,
Letter of Credit
($150 million)

0.30% or
approx. $496k
per year
3 years
P-1, A-1,
and F1
7 Interim Funding Program
(Power Enterprise)
• Authorized for $250 million of interim financing previously • $200 million of Additional Authorization Approved by
Commission, BOS and Mayor effective December 31, 2024
• Existing facilities consist of two series (totaling $250 million) backed by Letters of Credit for Commercial Paper (CP):

Series
Amount
($millions) Credit Facility Bank Facility Type
Expiration
Date
A-1 125 Bank of America Letter of Credit 3/6/26
A-2 125 Bank of America Letter of Credit 3/6/26
$250 Sub-Total: Existing Facilities under Prior Authorization 200 Unutilized New Authorization
$450 Total Program Authorization
8 New Credit Facilities
(Power Interim Funding Program)
• Based on the same RFP and process employed for
the Water Enterprise facilities, Staff recommends the
following proposed new credit facility for the Power
Enterprise:

Proposed Facility Proposed Fee
(Level 1) Tenor Short-Term
Bank Ratings
A-3, Sumitomo Mitsui Bank
Corp. Letter of Credit
($100 million principal)

0.32%, approx.
$355k per year 5 years P-1, A-1, and F-1
9 Additional Facility Terms
• Proposed facilities may be extended up to nine years
total
• The SFPUC also may (and typically does) solicit the
best pricing available prior to replacing or extending a facility
• Letter of Credit Facility fees are paid while the facility is in place, however interest and fees on Commercial
Paper is only paid to the extent Commercial Paper is
issued and until it is paid.
10 Additional Pricing Terms
• Pursuant to the terms of each agreement, Letter of
Credit fees are subject to increase (as specified in the respective credit facility agreement) in the event the
SFPUC's respective enterprise bond rating is
downgraded.
• Provide low-cost interim funding:
o Approximately 3-4% all-in Commercial Paper
borrowing rate in today's market (interest rate
(coupon) + credit facility fees + dealer fees)
o Credit agreements such as revolvers provide direct
bank loans at a predetermined spread to a
benchmark index (ex. SOFR or SIFMA) plus credit
facility fee
11 Recommended Commission Action
(Water Series A-1 and A-4)
• Series A-1: Request to approve Forms of First Amendment to the Reimbursement Agreement with SMBC ($100 million
principal)
• First Amendment to the Reimbursement Agreement
• Amended and Restated Fee Letter Agreement
• Series A-4: Request to approve Forms of the Reimbursement Agreement with PNC Bank ($150 million principal)
• Reimbursement Agreement
• Fee Letter Agreement
• Proposed Form of Amendment to Dealer Agreement with JP Morgan, Wells Fargo, and Bank of America
• Proposed Form of Issuing and Paying Agent Agreement for Series A-4/A-4-T with US Bank
• Form of updated Offering Memorandum for the issuance of commercial paper
12 Recommended Commission Action
(Power Series A-3)
• Series A-3: Request to approve Form of Revolving
Credit Agreement for a Not to Exceed Principal amount of $100 Million with Sumitomo Mitsui Bank Corp:
• Reimbursement Agreement
• Fee Letter Agreement
• A proposed First Amendment to Dealer Agreements with
Barclays, Goldman Sachs, and RBC Capital Markets
• A proposed Second Amended and Restated Issuing
Paying Agent Agreement with US Bank
• Form of updated Offering Memorandum for the issuance
of commercial paper
13 Questions

AGENDA ITEM
Public Utilities Commission
City and County of San Francisco

DEPARTMENT Financial Services AGENDA NO. 8 MEETING DATE February 11, 2025
Calendar: Regular Calendar
Project Manager: Nikolai J. Sklaroff

Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program

Summary of
Proposed
Commission
Action
Approve, in support of the San Francisco Public Utilities Commission ’s Water Enterprise Interim Funding Program, the (1) form of First Amendment to the Reimbursement Agreement, dated May 1, 2021, with Sumitomo Mitsui Banking Corporation (SMBC) in the aggregate principal amount not to exceed $100 million (exclusive of 270 days’ interest) and the form of related Amended and Re stated Fee Agreement ; (2) form of Reimbursement Agreement with PNC Bank in the aggregate principal amount not to exceed $150 million (exclusive of 270 days’ interest) and form of related Fee Agreement ; (3) Form of First Amendment to D ealer Agreement; (4) Issuing and Paying Agent Agreement with U.S. Bank Trust Company, National Association (US Bank) ; and (5) Offering Memorandum; and authorize the General Manager to enter into agreements with SMBC and PNC Bank for new Letters of Credit.

Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

Background,
Description
of Scope of
Services, and
Agreement
Terms:

The San Francisco Public Utilities Commission (SFPUC) manages short - term (or interim) funding of its Water Enterprise’s capital program through the periodic issuance of commercial paper (CP) notes or accessing available lines of credit, as needed.

CP is a form of flexible, short -term financing that takes advantage of short - term rates from 1 to 270 days. In today’s market, CP results in an approximate all-in borrowing rate of between 3% and 4%, which rate includes (i) interest paid to investors and (ii) the bank facility fees and securities dealer fees. CP dealers remarket (or resell) the CP to securities investors. While rates have declined recently, these rates are still elevated in the current market due to the inversion of the yield curve, when short -term rates are higher than long- term rates; however, as interest rates normalize, the short - term rates will
provide a signific ant advantage to long- term financing rates. In the meantime, the SFPUC’s Water Enterprise I nterim Financing Program provides capacity to release budget reserves and allows the SFPUC to borrow only what is needed in small tranches, and the n to aggregate borrowing costs into larger, more efficient long-term financings.

Each series of the SFPUC’s CP is secured by a borrowing document. The SFPUC intentionally diversifies the types of facilities employed, which may be reimbursement agreements supporting a letter of credit, a liquidity facility agreement (such as a Standby Note Purchase Agreement ), or a credit facility such as a revolving credit agreement . CP is a very flexible form of short-term or interim financing, which bears low short-term interest rates and is typically rolled to new investors at maturity, repaid, or taken out by bonds. The bank facilities are available t o ensure the SFPUC has sufficient liquidity to purchase the notes in the event new buyers are not available to purchase them at the next maturity. The letter of credit provides security to CP noteholders by ensuring the timely repayment of principal and interest on any issued and maturing CP of a related series. In the case that the dealers are not able to find additional investors, having a letter of credit or liquidity facility allows the SFPUC to be able to purchase the notes. The Water Enterprise can also access available lines of credit using a credit revolver (such as Series R -1 described below), all approved under its Interim Funding Program to fund capital projects.

When drawing funds from any of these facilities, interest is paid to the bank at a variable rate based on a market index at the time of the draw plus a fixed spread, or margin predetermined per agreement terms. The term of the draw is open- ended (up to the expiration date of the facility) and can be repaid when long-term revenue bonds are issued or when advantageous for the SFPUC.

The SFPUC’s Water Enterprise Interim Funding Program has been a cost - Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

effective way to fund the encumbrance, contract certification, and cash spending requirements of the Water Enterprise ’s capital program.

Encumbrance and contract certifications can be funded based on the availability of the bank facilities , and cash spending can be funded through the issuance of CP notes or draws on revolving credit agreements . The CP notes are remarketed until long-term revenue bond, long-term state, or long- term federal loan financing replacement proceeds are available.

Through a series of actions described in further detail below, t his Commission and the Board of Supervisors have authorized the SFPUC ’s Water Enterprise Interim Funding Program up to $750 million aggregate principal amount outstanding at any one time. This amount includ es the additional $250 million of borrowing capacity added on December 25, 2024 (30 days after the Mayor signed Ordinance No. 269- 24, approved by the Board of Supervisors on November 10, 2024).

The Water Enterprise Interim Funding Program is currently made up of the following components:

• Three series totaling $400 million (aggregate principal amount) that are for the issuance of either tax-exempt or taxable CP and that are each supported by a high-grade bank facility in the form of a letter of credit (LOC);
• One series that is for a $100 million revolving credit agreement ( line of credit) that can be used to make tax-exempt or taxable draws from a high-grade bank; and
• New authorization of $250 million pursuant to Ordinance No. 269- 24, approved by the Board of Supervisors on November 10, 2024, expanding the Water Enterprise Interim Funding Program by $250 million to a total not-to-exceed principal amount of $750 million.

Currently, the four series of the Water Enterprise Interim Funding Program are as follows:

1) Series A-1/A-1-T: $100 million Sumitomo Mitsui Bank LOC (Expiring 5/16/2025);
2) Series A-2/A-2-T: $200 million Sumitomo Mitsui Bank LOC (Expiring 7/14/2027);
3) Series A-3/A-3-T: $100 million Barclays Bank LOC
(Expiring 7/15/2027); and
4) Series R-1/R-1-T: $100 million US Bank Revolving Line of Credit (Expiring 7/16/2027)

The recent authorization history of the Water Enterprise Interim Funding Program is as follows:

Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

On May 11, 2021, by Resolution No. 21 -0076, the Commission approved a Reimbursement Agreement, dated May 1, 2021, with Sumitomo Mitsui

Bank Banking Corporation, in the not-to-exceed principal amount of $100 million and with an initial term of four years, pursuant to which Sumitomo Mitsui Bank issued a LOC. This agreement is set to expire on May 16, 2025, and SFPUC staff proposes that it be extended pursuant to the First Amendment attached to this staff report . Together, the Reimbursement Agreement (a copy of which is attached here for convenience), and the First Amendment constitute a new agreement for purposes of Charter Section 9.118(b). A new term of the Sumitomo Mitsui Bank LOC will commence upon the effective date of the First Amendment.

On September 10, 2024, by Resolution No. 24- 0193, the Commission approved a $250 million expansion of the Water Enterprise Interim Funding Program, from $500 million to $750 million in authorized aggregate principal outstanding at any one time.

On November 10, 2024, by Ordinance No. 269- 24, the Board of Supervisors approved the same $250 million expansion of the Water Enterprise Interim Funding Program, from $500 million to $750 million.

Staff recommends that the Commission approve the form of the following:
• A proposed First Amendment to the Reimbursement Agreement with Sumitomo Mitsui Banking Corporation (SMBC) that will extend the current LOC “(1) Series A -1/A-1-T: $100 million Sumitomo Mitsui Bank LOC, expiring 5/16/2025,” and a proposed Amended and Restated Fee Agreement with SMBC including an amendment to Irrevocable Letter of Credit, as described below; • A proposed Reimbursement Agreement with PNC Bank National Association for Series A -4/A-4-T: $150 million PNC Bank LOC and a proposed Fee Agreement with PNC Bank including an Irrevocable Letter of Credit, as described below;
• A proposed First Amendment to Dealer Agreement with JP Morgan Securities LLC, Wells Fargo National Association and BofA Securities, Inc., as described below;
• A proposed Issuing and Paying Agent Agreement with U.S. Bank Trust Company, National Association, as described below; and • A proposed Offering Memorandum, as described below.

Bank Facility Procurement Process: As has been SFPUC practice in the past, to renew or replace expiring agreements, the SFPUC has chosen to rely on the prequalified bank pool created by the San Francisco Airport Commission through a formal Request for Qualifications process. On October 21, 2024, the SFPUC’s Municipal Advisors solicited proposals from all banks Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

in the pre-qualified Bank Credit Facilities Pool. On November 8, 2024, the SFPUC received proposals from seven banks, which the Municipal Advisors assisted in evaluating.

Recommendations: Staff recommends approval of the following facilities based on an evaluation of the terms, cost, credit quality of the bank, facility type offered, and other criteria as outlined in the RFP, as follows:

Water Series A -1 (Replacement Facility) : The First Amendment to the Reimbursement Agreement with SMBC for Letter of Credit in the Principal Amount of $100 million at annual cost of 0.32% (approximately $355,000 annually) for five years, with the option to extend the Letter of Credit for up to a total term of up to nine years from the commencement of the initial term thereof (such initial term resetting upon effectiveness), and a proposed not -to-
exceed fee of
$710,000 per year1.

Water Series A -4 (New Facility): A new Reimbursement
Agreement with PNC Bank for Letter of Credit in the Principal Amount of $150 million at annual cost of 0.30% (approximately $496,000 annually)
for three years with the option to extend the
Letter of Credit for up to a total term of up to nine years from the commencement of the initial term thereof, and a proposed not -to- exceed fee of $992,000 per year1.

These costs and fees are below the assumptions used in financial plans for the recently approved Water Enterprise capital budget and are comparable to fees obtained from banks for other recent SFPUC agreements fees:

The replacement and new proposed credit facilities have high -grade short- term credit ratings from Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings, respectively as follows:

• SMBC P-1/A-1/F1
• PNC Bank P-1/A-1/F1

Expiring
Facility
Expiring Fee Proposed
Facility
Tenor Annual
Fee
A-1, SMBC
($100m)

0.33% A-1, SMBC
LOC ($100m
5 years 0.32%
n/a n/a A-4, PNC Bank
LOC ($150m)
3 years 0.30%

Description of Documents:

First Amendment to the Reimbursement Agreement (SMBC) : This agreement, by and between the SFPUC and SMBC , sets forth the terms Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

pursuant to which the direct -pay and irrevocable LOC is issued to the Issuing and Paying Agent for the account of the SFPUC, as well as the terms under which the SFPUC repays SMBC for draws on the LOC.

Amended and Restated Fee Agreement (SMBC) : The Fee Agreement, by and between the SFPUC and SMBC, sets out the annual facility fee paid by the SFPUC to the bank, including fees in the event of Water Enterprise credit rating downgrades , and any bank charges in connection with draws upon the LOC.

Irrevocable Letter of Credit (SMBC): Issued by SMBC in favor of the Issuing and Paying Agent, the Irrevocable Letter of Credit (which appears as an appendix to the Reimbursement Agreement , as amended to the First Amendment) is the credit facility that is drawn upon by the Issuing and Paying Agent to pay principal and interest due on maturing CP.

Reimbursement Agreement (PNC Bank) : This agreement, by and between the SFPUC and PNC Bank sets forth the terms pursuant to which the direct - pay and irrevocable LOC is issued to the Issuing and Paying Agent for the account of the SFPUC, as well as the terms under which the SFPUC repays PNC Bank for draws on the LOC.

Fee Agreement (PNC Bank) : The Fee Agreement, by and between the SFPUC and PNC Bank, sets out the annual facility fee paid by the SFPUC to the bank, including fees in the event of Water Enterprise credit rating downgrades; and any bank charges in connection with draws upon the LOC.

Irrevocable Letter of Credit (PNC Bank): Issued by PNC Bank in favor of the Issuing and Paying Agent, the Irrevocable Letter of Credit (which appears as an appendix to the Reimbursement Agreement) is the credit facility that is drawn upon by the Issuing and Paying Agent to pay principal and interest due on maturing CP, in the event the SFPUC is unable to make payments.

Issuing and Paying Agent Agreement Relating to Subseries A-4/A-4-T (US Bank):

This Agreement, between the SFPUC and the Issuing and Paying Agent , U.S. Bank, sets out the terms pursuant to which the SFPUC issues and repays CP, and establishes various funds into which proceeds of the CP are deposited or from which the SFPUC repays the credit facility bank of Subseries A -4/A-4-T (SMBC) for draws against the respective credit facility (the Letter of Credit).

Amendment to Dealer Agreement (JP Morgan, Bank of America and Wells Fargo):

These agreements, by and between the SFPUC and JP Morgan, Bank of America and Wells Fargo, collectively referred to as the “Dealers” amend the existing agreements to include the additional CP programs

Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

Offering Memorandum: This is the disclosure document that is used by the Dealers in placing or selling CP to prospective investors. It contains brief descriptions of the SFPUC, including the Water Enterprise and Water Interim Funding Program; the CP Notes; Sumitomo Mitsui Banking Corporation; Barclays, and PNC Bank; and the Banks’ Reimbursement Agreements.

Disclosure Considerations: The Water CP Program, through the Water Interim Funding Program, would be supported by the Sumitomo Mitsui Banking Corporation and PNC Bank LOCs as described in the Offering Memorandum (OM), in addition to being supported by the other existing LOCs issued by SMBC and Barclays . Unlike the Official Statement in a long-term revenue bond transaction, the OM for a CP Program supported by an LOC does not include financial and/or operating information of the issuer, in this case the SFPUC and Water Enterprise. Instead, CP investors rely primarily on the financial standing of the credit bank for the source of repayment.

Representations and Closing Considerations; Ongoing Disclosure : The Reimbursement Agreement and Irrevocable Letter of Credit of SMBC and PNC contain representations and warranties which have been reviewed and affirmed to be appropriate for the SFPUC by staff, the City Attorney’s Office, municipal advisors and the SFPUC’s outside Note Counsel. The representations and warranties include matters such as the good standing of the SFPUC; the authorization of the agreements, commercial paper /interim funding program , and letters of credit (as applicable) ; the absence of
material litigation; the fairness and accuracy of the financial statements; and that there has been no material adverse change in the financial condition of the SFPUC.

Upon closing of this transaction, staff will post the key transaction documents on EMMA (Electronic Municipal Market Access), the municipal bond industry’s on-line disclosure repository operated by the Municipal Securities Rulemaking Board.
: Budget & Costs The Water Enterprise capital budget and associated appropriations cover these associated costs.

Agenda Title: Approve Credit Facility Agreements for Interim Funding of Water Enterprise Capital Program Commission Meeting Date: February 11, 2025

Environmental
Review:

The proposed action is an approval for credit facility agreements that provide interim funding for the Water Enterprise capital program. On August 1, 2024, the Environmental Review Officer issued a Certificate of the City and County of San Francisco Planning Department (pursuant to Section 8B.124(b) of the City Charter) under Proposition E of November 2002, granting authority for the issuance of debt to the Board of Supervisors, for the Water Enterprise Capital Program. By this certification, the Environmental Review Officer certified that the projects to be funded throu
gh the sale of Water Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the California Environmental Quality Act (CEQA) or will undergo CEQA review when they are defined. This certificate can be found here:
https://sfgov.legistar.com/View.ashx?M=F&ID=13655934&GUID=50 8902F1-E4F7-4E7B-AFD3-435C73898E12]
Attachments: 1. Form of First Amendment to the Reimbursement Agreement with Sumitomo Mitsui Banking Corporation, as well as Original Reimbursement Agreement and Original Letter of Credit

2. Form of Amended and Restated Fee Agreement with Sumitomo Mitsui Banking Corporation

3. Form of Reimbursement Agreement with PNC Bank

4. Form of Fee Agreement with PNC Bank

5. Form of Issuing and Paying Agent Agreement

6. Form of First Amendment to Dealer Agreement

7. Offering Memorandum

1 The actual fee for future extensions is unknown and would be determined in negotiation with the bank or through a competitive process.

PUBLIC UTILITIES COMMISSION

City and County of San Francisco
RESOLUTION NO.: ___________
WHEREAS, On November 5, 2002, the voters of the City and County of San Francisco (the “City”) approved Proposition E (codified at Charter Section 8B.124, but hereinafter referred to as “Proposition E”), which among other things, authorized the Public Utilities Commission of the City and County of San Francisco (the “Commission”) to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City and County of San Francisco (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or clean water facilities or combinations of water and clean water facilities under the jurisdiction of the Commission (the “Water Enterprise”); and

WHEREAS, Pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203-98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City and County of San Francisco (the “Mayor”) on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board established a procedure pursuant to which the Commission may issue short-term indebtedness, including the issuance of commercial paper in anticipation of the issuance of its revenue bonds; and

WHEREAS, Under Section 8B.124 of the Charter of the City and County of San Francisco (the “Charter”), the Board’s authority to authorize an issuance of debt under Proposition E is subject to the provision of certain certifications of an independent engineer retained by the Commission and certain certifications by the San Francisco Planning Department, which certifications shall make the findings and determinations set forth in Charter Section 8B.124 (together, the “Proposition E Certificates”); and

WHEREAS, Pursuant to (i) Ordinance No. 174-20 adopted by the Board on September 29, 2020 and signed by the Mayor on October 1, 2020, (ii) Ordinance No. 112-22, adopted by the Board on June 14, 2022 and signed by the Mayor on June 24, 2022, (iii) Ordinance No. 180-23, adopted by the Board on July 25, 2023 and signed by the Mayor on July 28, 2023, and (iv) Ordinance No. 131-24 adopted by the Board on June 18, 2024 and signed by the Mayor on June 27, 2024, the Board has authorized the issuance from time to time of up to $1,887,552,493 of water revenue bonds and other forms of indebtedness of the Commission under Proposition E, and in the anticipation of the issuance of such indebtedness, has authorized the issuance of short- term indebtedness of the Commission; and

WHEREAS, The amount of authorized but unissued water revenue bonds under the ordinances set forth in the immediately preceding whereas clause is $1,696,974,012; and

WHEREAS, The Board has previously approved pursuant to Resolution No. 300-03, adopted by the Board on May 6, 2003, and signed by the Mayor on May 16, 2003, the

establishment of a commercial paper program/interim funding program (the “Water Interim Funding Program”) for the Water Enterprise and the issuance of up to $250 million, at that time, in aggregate principal amount of Water Enterprise commercial paper notes and/or bank notes outstanding at any one time; and

WHEREAS, The Board has previously approved pursuant to Ordinance No. 311-08, adopted by the Board on December 16, 2008 and signed by the Mayor on December 19, 2008, an increase in the Water Interim Funding Program from an aggregate principal amount of $250 million to an aggregate principal amount of $500 million outstanding at any one time; and

WHEREAS, Pursuant to Ordinance No. 269-24 (“Ordinance No. 269-24”), adopted by the Board on November 19, 2024 and signed by the Mayor on November 25, 2024, and Resolution No. 24-0193 (“Resolution No. 24-0193”), adopted by this Commission on September 10, 2024, the Water Interim Funding Program was increased from an aggregate principal amount of $500 million to an aggregate principal amount of $750 million outstanding at any one time; and

WHEREAS, In connection with the Water Interim Funding Program, and in order to provide liquidity for the payment of the Commission’s maturing Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-1 and Taxable Subseries A-1-T, the Commission has previously authorized, executed and delivered (as applicable), a letter of credit issued by Sumitomo Mitsui Banking Corporation, acting through its New York Branch (“SMBC”), dated as of May 18, 2021 (the “Current SMBC Letter of Credit”), a Reimbursement Agreement, dated as of May 1, 2021 (the “Current SMBC Reimbursement Agreement”), between the Commission and SMBC, and a Fee Agreement, dated May 18, 2021 (the “Current SMBC Fee Agreement”), between the Commission and SMBC; and

WHEREAS, The Current SMBC Letter of Credit will terminate by its terms on May 16, 2025; and

WHEREAS, In order to support and/or maintain the Water Interim Funding Program, the Commission issued a request for bids from qualified banks to provide for one or more letters of credit, revolving credit facilities and/or revolving lines of credit and/or any other short-term borrowing facility which furthers the purpose and intent of the Water Interim Funding Program; and

WHEREAS, After an evaluation of the responses to such request for bids, the Commission staff determined that the following were the most advantageous to the Commission, and were determined to be the lowest cost, responsive and responsible bidders to support and/or maintain the Water Interim Funding Program: (i) a direct-pay letter of credit provided by SMBC, in an original stated principal amount not-to-exceed $100 million, plus an amount equal to 270 days interest on such principal amount at a rate of twelve-percent (12%) per annum, to secure the repayment of a portion of the Water Interim Funding Program commercial paper notes (the “Water CP Notes”), and (ii) a direct-pay letter of credit offered by PNC Bank, National Association (“PNC”), in an original stated principal amount not-to-exceed $150 million, plus an amount equal to 270 days interest on such principal amount at a rate of twelve-percent (12%) per

annum, to support the repayment of a portion of the Water CP Notes; and

WHEREAS, To assist in ease of drafting and for the convenience of the Commission and SMBC (as the provider of the Current SMBC Letter of Credit and the New SMBC Letter of Credit (as defined herein)), given the provider of the current letter of credit is the same as the provider of the proposed new letter of credit, rather than entering into a new reimbursement agreement and fee agreement, the Commission finds it in its best interest to make certain amendments to (or amendments and restatements of) the Current SMBC Reimbursement Agreement and the Current SMBC Fee Agreement in connection with the New SMBC Letter of Credit (as defined herein); and

WHEREAS, The proposed form of (i) the First Amendment to Reimbursement Agreement (the “First Amendment to Reimbursement Agreement”, and together with the Current SMBC Reimbursement Agreement, the “SMBC Reimbursement Agreement”), which includes, as an exhibit, an amendment to the Current SMBC Letter of Credit (together, the “New SMBC Letter of Credit”)), between the Commission and SMBC, and (ii) a First Amended and Restated Fee Agreement, between the Commission and SMBC (the “New SMBC Fee Agreement”), have been presented to the Commission and filed with the Secretary, and the Commission finds it in its best interest to enter into and perform such agreements; and

WHEREAS, The SMBC Bank Agreements (as defined herein) will be treated as new agreements and not as an amendments to the prior agreements for purposes of Charter Section

9.118(b) because the initial term of such documents will therefore commence upon their effectiveness and the term of the Current SMBC Letter of Credit will not be considered for purposes of Charter Section 9.118(b); and

WHEREAS, The proposed form of the Reimbursement Agreement, between the Commission and PNC (the “PNC Reimbursement Agreement”), which includes, as exhibits, the form of the PNC Letter of Credit (the “PNC Letter of Credit”) and the form of Bank Note (the “PNC Bank Note”) to be executed by the Commission in favor of PNC evidencing any and all obligations of the Commission to reimburse PNC under the PNC Reimbursement Agreement, and a Fee Agreement, between the Commission and PNC (the “PNC Fee Agreement”), have been presented to the Commission and filed with the Secretary, and the Commission finds it in its best interest to enter into such agreements; and

WHEREAS, Pursuant to Ordinance No. 269-24, the Commission is authorized to take such actions and to execute and deliver such promissory notes, certificates, agreements, requests or other documents, as necessary or desirable to facilitate the issuance, sale and delivery of short- term indebtedness of the Water Interim Funding Program and to carry out the provisions of Ordinance No. 269-24 to accomplish the purpose and intent of the Water Interim Funding Program; and

WHEREAS, In connection with the Water CP Notes, the Commission finds it necessary to execute one or more issuing and paying agent agreements, one or more amendments to commercial paper dealer agreements and to deliver an updated offering memorandum in connection with the issuance and sale of its Water CP Notes; and

WHEREAS, Pursuant to Resolution No. 23-0135, adopted by the Commission on June 27, 2023, the Commission has previously authorized, executed and delivered commercial paper dealer agreements with BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Bank, National Association (the “Current Dealer Agreements”) in connection with the Water Interim Funding Program and finds it necessary to execute one or more amendments to such dealer agreements (each an “Amendment to Dealer Agreement”) in connection with the expansion of the Water Interim Funding Program authorized/approved in Ordinance No. 269-24; and

WHEREAS, The proposed form of an issuing and paying agent agreement (the “Issuing and Paying Agent Agreement”), to be by and between the Commission and U.S. Bank Trust Company, National Association (the “Issuing and Paying Agent”) has been presented to the Commission and filed with the Secretary; and

WHEREAS, The proposed form of an Amendment to Dealer Agreement has been presented to the Commission and filed with the Secretary; and

WHEREAS, The proposed form of an offering memorandum (the “Offering Memorandum”) has been presented to the Commission and filed with the Secretary; and

WHEREAS, The Commission has paid, beginning no earlier than 60 days prior to the adoption of this Resolution, and will pay, on and after the date hereof, certain expenditures (the “Expenditures” as defined in the Code referred to below) in connection with the acquisition, construction and/or equipping of the Water Enterprise capital improvement program projects; and

WHEREAS, The Commission adopts this Resolution as official action of the Commission in order to comply with Treasury Regulation §1.150-2 and any other regulations of the Internal Revenue Service (the “Code”) relating to the qualification for reimbursement of Commission Expenditures (as defined in the Code) incurred prior to the date of issue of any obligations under the Water Interim Funding Program; and

WHEREAS, The Proposition E Certificates meeting the Proposition E requirements, including California Environmental Quality Act requirements are on file with the Clerk of the Board in accordance with Proposition E prior to the issuance of any obligations under the Water Interim Funding Program; now, therefore, be it

RESOLVED by the Public Utilities Commission of the City and County of San Francisco, as follows:

Section 1.Approval of SMBC Bank Agreements. The forms of the SMBC Reimbursement Agreement (which includes, the form of the First Amendment to Reimbursement Agreement, and as exhibits, the form of the New SMBC Letter of Credit and the form of the New SMBC Bank Note) and the New SMBC Fee Agreement, (collectively, the “SMBC Bank Agreements”), in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director of the City’s Office of Public Finance (the “Director”) for approval

pursuant to the Administrative Code, Article V thereof. The General Manager (or the duly authorized and acting General Manager) of the Commission (in either capacity, referred to herein as, the “General Manager”) or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver the SMBC Bank Agreements in substantially said forms, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such SMBC Bank Agreements, provided that the SMBC Bank Agreements may be extended for an additional term (as set forth in Section 3 below). The performance by the Commission of the terms of the SMBC Bank Agreements in their respective executed forms are also hereby approved.

Section 2.Approval of PNC Bank Agreements. The forms of the PNC Reimbursement Agreement (which includes, as exhibits, the form of the PNC Letter of Credit and the form of the PNC Bank Note) and the PNC Fee Agreement (collectively, the “PNC Bank Agreements, ” and together with the SMBC Bank Agreements, the “Bank Agreements”), in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director for approval pursuant to the Administrative Code, Article V thereof. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver the PNC Bank Agreements in substantially said forms, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such PNC Bank Agreements, provided that the PNC Bank Agreements may be extended for an additional term (as set forth in Section 3 below). The performance by the Commission of the terms of the PNC Bank Agreements in their respective executed forms are also hereby approved.

Section 3.Extension of Terms of Bank Agreements .

The General Manager or their
designee, the Deputy Chief Financial Officer and the Capital Finance Director, are further authorized, upon consultation with the City Attorney and the Director, to execute one or more amendments to the Bank Agreements, to extend the term of the New SMBC Letter of Credit and/or the term of the PNC Letter of Credit authorized hereunder, by an aggregate period not to exceed nine (9) years from the commencement date of the respective initial term. The annual facility fee payable by the Commission in connection with the New SMBC Reimbursement Agreement and the related New SMBC Fee Agreement shall not exceed (i) $355,000, initially, and subject to adjustment as set forth in the related New SMBC Fee Agreement, and (ii) $710,000 in connection with any future extension thereof. The annual facility fee payable by the Commission in connection with the PNC Reimbursement Agreement and the PNC Fee Agreement shall not exceed (i) $496,000, initially, and subject to adjustment as set forth in the related PNC Fee Agreement, and (ii) $992,000 in connection with any future extension thereof.

Section 4.Approval of Issuing and Paying Agent Agreement. T he form of the Issuing and
Paying Agent Agreement, to be by and between the Commission and the Issuing and Paying Agent, in substantially the form submitted to this Commission, is hereby approved and recommended to the Director for approval pursuant to the Administrative Code, Article V thereof. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver the Iss uing and

Paying Agent Agreement in substantially said form, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such Issuing and Paying Agent Agreement. The performance by the Commission of the terms of the Issuing and Paying Agent Agreement in its executed form is also hereby approved.

Section 5.Approval of Amendment to Dealer Agreement. The form of the Amendment to Dealer Agreement, in substantially the form submitted to this Commission, is hereby approved and recommended to the Director for approval pursuant to the Administrative Code, Article V thereof. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver the Amendment to Dealer Agreement, for each of the Current Dealer Agreements approved pursuant to Resolution No. 23-0135 (subject to the limitations set forth therein), in substantially said form, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such Amendment to Dealer Agreements. The performance by the Commission of the terms of each Amendment to Dealer Agreement in their executed form is also hereby approved.

Section 6.Approval of Offering Memorandum .

The General Manager or their designee,
upon consultation with the City Attorney and the Director, is hereby authorized and directed to prepare and cause the distribution of an Offering Memorandum relating to the Water Interim Funding Program and the sale of commercial paper notes thereunder, in substantially the form on file with the Commission, subject to such additions thereto and changes therein, and any amendments or supplements thereto from time to time which the General Manager, upon consultation with the City Attorney and the Director, shall approve. The General Manager (or any designee thereof) is further authorized and directed to distribute, in connection with the sale of any commercial paper notes, one or more Offering Memorandum(s) in such form, as the General Manager, upon consultation with the City Attorney, Bond Counsel and the Director shall approve.

Section 7.Limitations. I
n no event shall the commercial paper notes or draws made under the Water Interim Funding Program exceed $750 million in aggregate principal amount and in no event shall the interest rate or interest rates cause the aggregate average interest cost to exceed 12% per annum provided, however, that if the City or the Board increases the maximum interest rate allowable under any bank agreement (as it relates to the obligations payable thereunder), then such increased rate shall be the permitted maximum interest rate (as it relates to the obligations payable under bank agreements).

Section 8.Intent to Reimburse. T
his Commission hereby declares the official intent of the Commission to reimburse the Commission with proceeds of the commercial paper notes or from draws made under the Bank Agreements with respect to the Water Enterprise capital improvement projects made on and after a date that is no more than 60 days prior to the adoption of this Resolution. The Commission reasonably expects on the date hereof that it will reimburse the Expenditures with proceeds of the commercial paper notes or fr om draws made under the Bank Agreements. Each such Expenditure was and will be either (A) of a type properly chargeable to a capital account under general federal income tax principles (determined in each

case as of the date of the Expenditure), (B) a cost of issuance with respect to the commercial paper notes or from draws made under the Bank Agreements, (C) a nonrecurring item that is not customarily payable from current revenues, or (D) a grant to pay a party that is not related to or an agent of the issuer so long as such grant does not impose any obligation or condition (directly or indirectly) to repay any amount to or for the benefit of the Commission. The Commission will make a reimbursement allocation, which is a written allocation that evidences the Commission’s use of proceeds of the commercial paper notes or from draws made under the Bank Agreements to reimburse an Expenditure, no later than 18 months after the later of the date on which the Expenditure is paid or the component of the capital improvement projects is placed in service or abandoned, but in no event more than three years after the date on which the Expenditure is paid.

The Commission recognizes that exceptions are available for certain “preliminary expenditures,” costs of issuance, certain de minimis amounts, expenditures by “small issuers” (based on the year of issuance and not the year of expenditure) and expenditures for construction projects of at least 5 years.

Section 9.Further Actions. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, and in consultation with the City Attorney and the Director, are each hereby authorized and directed to execute such other agreements, certifications or documents and to take any and all necessary action in connection with and in furtherance of the execution and performance of the Bank Agreements and the marketing and sale of the commercial paper notes under the Water Interim Funding Program.

Section 10.Delegation. T
he General Manager is authorized to delegate any of the responsibilities or duties set forth in this resolution to the Assistant General Manager, Business Services and Chief Financial Officer of the Commission.

Section 11.Ratification. A
ll actions heretofore taken by the officials, employees and agents of the Commission with respect to the execution of the Bank Agreements in connection with providing short-term interim funding of the Water Enterprise capital improvement program, including the Water Interim Funding Program, are hereby approved, confirmed and ratified.

Section 12.Effective Date. This resolution shall take effect from and after its adoption.

I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting on February 11, 2025.

Director of Commission Affairs
San Francisco Public Utilities Commission

CHAPMAN DRAFT
JANUARY 27, 2025
1304418668-1__first_amendment_to_reimb_agmnt__sfpuc_smbc_water_cp_a_1__4927_8735_3611_v9 4428512

FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT
This First Amendment to Reimbursement Agreement (this “Amendment”) dated February [__], 2025 (the “Amendment Date”), is between the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (together with its successors and assigns, the “Commission”) and SUMITOMO MITSUI BANKING CORPORATION, acting through its New York Branch (together with its successors and assigns, the “Bank”). All capitalized terms used herein and not defined herein shall have the meanings set forth in the hereinafter defined Agreement.

W ITNESSETH
WHEREAS, the Commission and the Bank have previously entered into that certain Reimbursement Agreement dated as of May 1, 2021 (as amended, restated, supplemented or otherwise modified to date in accordance with its terms, the “Agreement”), pursuant to which the Bank issued its Irrevocable Letter of Credit No. LG/MIS/NY-192094 (the “Letter of Credit” ), supporting the Commission’s Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-1 and Taxable Subseries A-1-T (collectively , the “Notes”); WHEREAS, pursuant to Sections 7.1 and 7.8 of the Agreement, the Agreement may be amended by a written amendment thereto, executed by the Commission and the Bank; and WHEREAS, the Commission has requested that an amendment be made to the Agreement, and the Bank ha s agreed to make such amendment to the Agreement subject to the terms and conditions set forth herein.

NOW THEREFORE , in consideration of the premises, the parties hereto hereby agree as follows:

SECTION 1. AMENDMENTS.

Upon the satisfaction of the conditions precedent set forth in Section 3 hereof, the Agreement is hereby amended as follows:

1.01. The sixth WHEREAS clause under the heading “WITNESSETH:” in the Agreement is hereby amended and restated to read as follows:

WHEREAS, pursuant to Resolution No. 17- 0161, adopted by the Commission on July 11, 2017 and Resolution No. 21- 0076, adopted by the Commission on May 11, 2021 (together, the “Commission Resolutions” ), the Commission authorized, executed and delivered that certain Issuing and Paying Agent Agreement, dated as of July 1, 2017, as amended by that certain First Amendment to Issuing and Paying Agent Agreement, dated as of May 18, 2021, each with U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Issuing and Paying Agent”), pursuant to which the Commission has authorized the issuance of the Public Utilities Commission of the City and County of San -2-
Francisco Commercial Paper Notes (Water Series, Proposition E) Tax -Exempt Subseries A-1 and Taxable Subseries A-1-T (the “Series A-1/A-1-T Commercial Paper Notes”); and

1.02. The following defined terms set forth in Section 1.1 of the Agreement are hereby amended in their entireties and as so amended shall be restated to read as follows:
“Annual Debt Service” has the meaning set forth in the Water Bonds Indenture; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans.
“Bank Agreement” means any credit agreement, liquidity agreement, standby bond purchase agreement, reimbursement agreement, direct purchase agreement, bond purchase agreement , loan agreement, other agreements under which loans are made, or any other agreement or instrument (or any amendment, supplement or other modification thereof) under which, directly or indirectly, any Person or Persons undertake(s) to make or provide funds to make payment of, or to purchase or provide credit enhancement for bonds or notes of the Commission secured by or payable from Water Enterprise Revenues and/or the Revenue Fund.
“Bank Rate” means, subject to the terms of Section 2.16 hereof, a rate of interest per annum with respect to each Advance and Term Loan, as applicable, (i) for any day commencing on the date the related Drawing is made up to and including the thirtieth (30th) day next succeeding the date the related Drawing is made, equal to the Base Rate from time to time in effect, (ii) for any day commencing on the thirty- first (31st) day next succeeding the date the related Drawing is made up to and including the ninetieth (90th) day next succeeding the date the related Drawing is made, equal to the Base Rate from time to time in effect plus one percent (1.0%); (iii) for any day commencing on the ninety-first (91st) day next succeeding the date the related Drawing is made and thereafter, equal to the Base Rate from time to time in effect plus two percent (2.0%); provided, however , that immediately and automatically upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuance of such Event of Default or if the conditions precedent set forth in Section 2.4(f) hereof are not satisfied on a Term Loan Conversion Date with respect to any related Advance, “Bank Rate” shall mean the Default Rate; provided, further, that at no time shall the Bank Rate be less than the highest rate on any outstanding Series A-1/A-1-T Commercial Paper Notes.
“Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any Law, including, without limitation any Risk-Based Capital Guidelines, (b) any change in any Law or in the enforcement, administration, interpreta tion, implementation or application thereof by any Governmental Authority or compliance by the Bank or any -3-
Participant therewith or (c) the making or issuance of any request, rule, ruling, guideline, regulation or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act (or any other statute referred to therein or amended thereby) and all laws, requests, rules, regulations, policies, rulings, guidelines, regulations, standards or directives thereunder or issued in connection therewith and any interpretation, application or promulgation implementing, invoking or in any way the Dodd- Frank Wall Street Reform and Consumer Protection Act.
“Debt” of any Person means, at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital leases and finance leases, (e) all d ebt of others secured by a Lien on any asset of such Person, whether or not such debt is assumed by such Person, (f) all Guarantees by such Person of debt of other Persons, (g) all obligations of such Person under any Swap Contract and (h) all obligations of such Person to reimburse or repay any bank or other Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument. “Debt Service” has the meaning set forth in the Water Bonds Indenture; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans.
“Federal Funds Rate” means, for any day, a fluctuating interest rate per annum equal to the weighted average (rounded to the next higher 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average (rounded to the next higher 1/100 of 1%) of the quotations for such day on such transactions received by the Bank from three Federal funds brokers of re cognized standing selected by the Bank.

Each determination of the Federal Funds Rate by the Bank shall be conclusive and binding on the Commission. Notwithstanding the foregoing, if the Federal Funds Rate as determined under any method above would be less than zero percent (0.00%), such rate shall be deemed to be zero percent (0.00%) for purposes of this Agreement .
“Fee Agreement” means the Amended and Restated Fee Agreement dated February [__], 2025, between the Commission and the Bank, as supplemented, amended and restated from time to time in accordance with its terms.
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“Parity Debt” means any Debt issued or incurred by the Commission and (i) payable on a parity basis from the Revenue Fund with the payment of principal of and interest on the Series A-1/A-1-T Commercial Paper Notes or the Obligations and includes, without limitation, the Bank Note, the Commercial Paper Notes, the Parity Notes and the Parity Bank Notes and/or (ii) secured on a parity with the lien on Availab le Water Enterprise Revenues securing the payment of principal of and interest on the Series A-1/A-1-T Commercial Paper Notes or the Obligations and includes, without limitation, the Bank Note, the Commercial Paper Notes, the Parity Notes and the Parity Bank Notes. “Parity Notes” means commercial paper notes or other short -term indebtedness payable from or secured by Available Water Enterprise Revenues and/or the Revenue Fund.
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlle d by any such Person.
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S.

Department of the Treasury or the U.S. Department of State. “Senior Debt” means any Debt issued or incurred by the Commission and secured by or payable from Water Enterprise Revenues and/or the Revenue Fund on a basis senior or superior to the lien in favor of the Commercial Paper Notes, the other Parity Notes, the Bank Note and the Parity Bank Notes and includes, without limitation, the Senior Water Bonds, Senior State Loans and any Subordinated Water Bonds.
“Senior Water Bonds” has the meaning ascribed to the term “Bonds” in the Water Bonds Indenture, and includes bonds, notes or other evidences of indebtedness payable from Water Enterprise Revenues on a parity with the outstanding Senior Water Bonds (including, the Senior State Loans). “Stated Expiration Date” has the meaning set forth in the Letter of Credit. For the purpose of clarity, the Stated Expiration Date is February [__], 2030.
“Water Enterprise” inclusively, has the meaning set forth in the Issuing and Paying Agent Agreement and the Water Bonds Indenture. “Water Enterprise Debt” means any Debt issued or incurred by the Commission and secured by or payable from Water Enterprise Revenues and/or -5-
the Revenue Fund, including any obligations of the Commission under any related reimbursement agreements or liquidity agreements or bank notes secured by or payable from Water Enterprise Revenues and/or the Revenue Fund.

1.03. Section 1.1 of the Agreement is hereby amended by the addition thereto of the following defined terms to read as follows and appear in the appropriate alphabetical sequence:
[“Acceleration Notice” has the meaning set forth in Section 6.2 hereof.]
“Amendment Effective Date” means the date the Proposed Amendments become effective pursuant to Section 187.01 of the Forty -Third Supplemental Indenture.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Commission from time to time concerning or relating to bribery or corruption.
“Anti-Terrorism Laws” means any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Governmental Authority of competent jurisdiction relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.
“Forty-Third Supplemental Indenture” means the Forty- Third Supplemental Indenture dated as of July 1, 2023, by and between U.S. Bank Trust Company, National Association, as trustee, and the Commission, as the same may be amended, restated, or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Maximum Annual Debt Service” has the meaning set forth in the Water Bonds Indenture; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans.
“Proposed Amendments” means the proposed amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture. “Revenue Fund” has the meaning set forth in the Water Bonds Indenture. “Senior State Loans” means each loan agreement or installment sale agreement entered into between the Commission and the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof), in each case, to finance additions, betterments, extensions, repairs, renewals or replacements to the Water Enterprise, and which, by their terms, are secured by or payable from Revenues -6-
and/or the Revenue Fund on a senior basis to the obligations hereunder, under the Fee Agreement, the Bank Note, or Parity Notes .
“Subordinated Water Bonds Indenture” has the meaning set forth in the Issuing and Paying Agent Agreement.

1.04. Section 2.2 of the Agreement is hereby amended by adding thereto a new sentence to appear at the end thereof and to read as follows:

Upon honoring any Drawing, the Bank shall be deemed to have made a loan to the Issuing and Paying Agent is the proceeds of which shall be used by the Issuing and Paying Agent to pay the principal of and accrued interest on Series A-1/A-1-T Commercial Paper Notes at the stated maturity thereof.

1.05. The final sentence of Section 2.4(a) of the Agreement is hereby amended and as so amended shall be restated to read as follows:

Unless the Commission shall have otherwise previously advised the Bank in writing, payment by the Bank of any Drawing under the Letter of Credit shall be deemed to constitute a representation and warranty by the Commission that on the date of such Drawing (i) the representations and warranties of the Commission contained in Article Four hereof are true and correct, (ii) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, arbitrator, governmental or other board, body or official, pending or, to the best knowledge of the Commission, threatened against or affecting the Commission , questioning the validity of the Charter, the Board Proceedings or the Commission Resolutions or any other Basic Document to which it is a party, or the validity of any Parity Debt, or seeking to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of any of the foregoing, and (iii) no Default or Event of Default has occurred and is continuing.

1.06. Section 2.4(f) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(f) Conditions Precedent to Term Loans. Principal amounts owed by the Commission for Advances remaining unpaid on their respective Term Loan Conversion Dates will be converted to Term Loans if and only if:
(i) the representations and warranties of the Commis sion contained in Article Four of this Agreement are true and correct on and as of the Term Loan Conversion Date, and deemed made as of such date, as though made on and as of such date;
(ii) no event has occurred and is continuing which has or is having a material adverse effect on the Commission’s obligations under this Agreement, -7-
the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith;
(iii) no Default or Event of Default has occurred and is continuing or would result from converting the Advance to a Term Loan; and (iv) no No-Issuance Notice is in effect; no Final Drawing Notice is in effect[; and no Acceleration Notice has been delivered to the Commission ].

1.07. Section 2.6 of the Agreement is hereby amended by adding thereto a new sentence to appear at the end thereof and to read as follows:

The Commission’s obligations to repay each Unpaid Drawing, Advance and Term Loan and to pay interest thereon as provided herein shall be evidenced and secured by the Bank Note, and the Commission shall redeem the Bank Note on each date on which the Commission is required to make a principal payment on an Unpaid Drawing, Advance and/or Term Loan, as applicable, in an amount equal to such payment due on such date and shall pay interest on the Bank Note on each date on which the Commission is required to make an interest payment on an Unpaid Drawing, Advance and/or Term Loan, as applicable.

1.08. Section 2.8 of the Agreement is hereby amended and restated to read as follows:

Section 2.8. Computation of Interest and Fees. Interest and fees payable hereunder and under the Fee Agreement shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. Interest shall accrue during each period during which interest is computed from and including the first da y thereof to but excluding the last day thereof.

1.09. Section 2.10 of the Agreement is hereby amended and restated to read as follows:

Section 2.10. Late Payments. If any Obligation is not paid when due, such Obligation will bear interest until paid in full at a rate per annum equal to the Default Rate, payable on demand. Upon the occurrence and during the continuance of an Event of Default, the Obligations of the Commission hereunder will bear interest at the Default Rate, which interest will be payab le by the Commission to the Bank upon demand.

1.10. Section 4.3(c) of the Agreement is hereby amended by adding thereto a new sentence to appear at the end thereof and to read as follows:
(c) There is no pledge of or Lien on Water Enterprise Revenues that ranks senior to the obligations hereunder, under the Fee Agreement, the Bank Note, or Parity Notes other than for Senior Debt .
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1.11. Section 4.10 of the Agreement is hereby amended by adding thereto a new sentence to appear at the end thereof and to read as follows:

To the best knowledge of the Commission after due inquiry, the re is no public vote or referendum pending, proposed or concluded, the results of which could reasonably be expected result in a material adverse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note, or any of the other Basic Documents to which it is a party or the ability of the Commission to perform its obligations in connection herewith or therewith or the enforceability or vali dity of this Agreement or any of the other Basic Documents.

1.12. Section 4.14 of the Agreement is hereby amended and restated to read as follows:

Section 4.14. Issuing and Paying Agent; Dealers. The Commission represents that U.S. Bank Trust Company, Nat ional Association has been appointed the Issuing and Paying Agent for the Series A - 1/A-1-T Commercial Paper Notes and that, as of February __, 2025, BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Bank, National Association, collectively , initially, have each been duly appointed to serve as Dealers for the Series A-1/A- 1-T Commercial Paper Notes under their respective Dealer Agreement and by the Commission.

1.13. Section 4.22 of the Agreement is hereby amended and restated to read as fol lows:

Section 4.22. Sanction Concerns and Anti -Corruption Laws. The Commission has implemented and maintains in effect policies and procedures designed to ensure compliance by the Commission and its directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Commission and its officers and employees and to the knowledge of the Commission its directors and agents, are in compliance with Anti -Corruption Laws and applicable Sanctions in all material respects. None of (a) the Commission or to the knowledge of the Commission any of its directors, officers or employees, or (b) to the knowledge of the Commission, any of its agents or any subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions. The Commission is not in violation of any Anti -Terrorism Law nor does it engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti -Terrorism Law.

1.14. Section 5.1(a)(i) of the Agreement is hereby amended and restated to read as follows:
(i) as soon as practicable and, in any event, within, two hundred forty (240) days after the end of each Fiscal Year of the Commission, a balance sheet -9-
of the Commission as at the end of such Fiscal Year and statements of income, changes in fund balances and cash flows for the Fiscal Year then ended, all in reasonable detail prepared in accordance with GAAP consistently applied, and including therein calculations supporting the Commission’s compliance wit h Section 5.1(v) hereof; and accompanied by (A) a report and opinion of the Commission’s independent accountants (who shall be of recognized standing or an independent certified public accountant otherwise acceptable to the Bank) which report and opinion shall have been prepared in accordance with generally accepted auditing standards and (B) a compliance certificate, substantially in the form of Exhibit C hereto, signed by an Authorized Representative stating that no Event of Default or Default has occurred, or if such Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;

1.15. Section 5.1(g) of the Agreement is hereby amended and restated to read as follows:
(g) Use of Proceeds of the Series A -1/A-1-T Commercial Paper Notes.

The Commission will use the proceeds derived from the sale of the Series A-1/A-1-T Commercial Paper Notes only for the purposes set forth in the Basic Documents and for such other purpose or purposes as may be approved by the Bank. In addition, the Commiss ion will not use, nor permit the use of, the proceeds of the Series A-1/A-1-T Commercial Paper Notes or any Drawing to be applied in violation of Regulation U issued by the Board of Governors of the Federal Reserve System or in violation of any Anti -Corruption Laws, Anti-Terrorism Laws or Sanctions.

1.16. Section 5.1( q) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(q) Pledge of Available Revenues. The Series A -1/A-1-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note are revenue obligations, and are not secured by the taxing power of the Commission or the City and shall be payable as to both principal and interest from, and shall be secured solely by a pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of, the Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts). The Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts) constitute a trust fund for the security and payment of the interest on and principal of the Series A-1/A-1-T Commercial Paper Notes, the B ank Note and all obligations of the Commission relating to the Series A -1/A-1-T Commercial Paper Notes and Bank Note under the Issuing and Paying Agent Agreement and this Agreement and all Parity Notes secured by Available Water Enterprise Revenues. The C ommission hereby pledges and grants a Lien and charge on and a security interest in Pledged Revenues (consisting of Available Water -10-
Enterprise Revenues and the Funds and Accounts) for the payment of the Series A-1/A-1-T Commercial Paper Notes and the Bank Note and all obligations of the Commission relating to the Series A -1/A-1-T Commercial Paper Notes and Bank Note under the Issuing and Paying Agent Agreement and hereunder without priority or distinction of one over the other, except as expressly provided under the Issuing and Paying Agent Agreement. The pledge of the Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts) herein made shall be irrevocable until all of the Series A -1/A-1- T Commercial Paper Notes and the Bank Note and any Parity Notes secured by Available Water Enterprise Revenues have been paid and retired and any related obligations of the Commission under this Agreement have been satisfied. No filing, registering or recording shall be required to perfect the security interest in the Available Water Enterprise Revenues. The Commission will not issue Debt secured by or payable from the Water Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Bank Note other than Senior Debt.

1.17. Section 5.1( u) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(u) Amounts of Rates and Charges (Water Enterprise Debt). The Commission covenants to establish, maintain and collect rates and charges with respect to the Water Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes or Senior Debt) to pay the Series A-1/A-1-T Commercial Paper Notes and the other Commercial Paper Notes, the Bank Note and the Parity Bank Notes, all other obligations secured by or payable from Water Enterprise Revenues (including, without limitation, all amounts due and owing hereunder and under the Parity Credit Agreements).

1.18. Section 5.1(v) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(v) Amounts of Rates and Charges (Senior Debt). (i) Prior to the Amendment Effective Date:
(A) The Commission covenants to at all times establish, fix, prescribe and collect rates, fees and charges in connection with the water services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates (for avoidance of doubt , calculated on a cash basis and not budgetary basis) to pay the following amounts:
(1) The interest on and principal of the Senior Debt as they become due and payable (but not including any interest moneys for the payment of which -11-
have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source).
(2) All other payments required for compliance with the terms of the Water Bonds Indenture and of any Supplemental Indent ure (as defined in the Water Bonds Indenture) providing for the issuance of additional Series of Bonds pursuant to Article III of the Water Bonds Indenture and of any Subordinated Water Bonds Indenture.
(3) All other payments to meet any other obligations of the Commission which are charges, liens or encumbrances upon, or payable from, the Revenues.
(4) All current Operation and Maintenance Costs of the Enterprise (but not including such Operation and Maintenance Costs of the Enterprise as are scheduled to be paid by the Commission from moneys other than Revenues, such moneys to be clearly available for such purpose).
(B) In addition to the requirements of the foregoing subsection (A), rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise shall be established, fixed, prescribed and collected so as to yield Net Revenues during the then immediately ensuing period of twelve months which (together with any fund balances of the Commission or the Enterprise which are available for payment of Debt Service and are not budgeted to be expended during such twelve months but excluding the Bond Reserve Fund (as defined in the Water Bonds Indenture)) (for avoidance of doubt, calculated on a cash basis and not budgetary basis), are equal to at least 1.25 times Annual Debt Service (but excluding any interest moneys for the payment of which have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source) for said twelve -month period. (C) The Commission may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce such rates, fees and charges below those then in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements of this Section. (ii) On and after the Amendment Effective Date,
(A) To the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates (for avoidance of doubt, calculated on a budgetary basis and not cash basis) to pay the following amounts:
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(1) The interest on and principal of Senior Debt as they become due and payable (but not includi ng any interest moneys for the payment of which have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source).
(2) All other payments required for compliance with the terms of the Water Bonds Indenture and of any Supplemental Indenture (as defined in the Water Bonds Indenture) providing for the issuance of additional Series of Bonds pursuant to Article III of the Water Bonds Indenture and of any Subordinated Water Bonds Indenture.
(3) All other payments to meet any other obligations of the Commission which are charges, liens or encumbrances upon, or payable from, the Revenues.
(4) All current Operation and Maintenance Costs of the Enterprise (but not including such Operation and Maintenance Costs of the Enterprise as are scheduled to be paid by the Commission from moneys other than Revenues, such moneys to be clearly available for such purpose).
(B) In addition to the requirements in subsection (A) immediately above, to the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise, which are reasonably expected to be at least sufficient to yield during such Fiscal Year Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund (as defined in the Water Bonds Indenture) equal to 1.25 times Annual Debt Service payable in such Fiscal Year.
(C) The Commission may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce such rates, fees and charges below thos e then in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements of this Section. (D) So long as the Commission has complied with its obligations set forth in clause (A) and clause (B) of this Section 5.1(v)(ii), the failure to yield the amount of Revenues as set forth in clause (A) of this Section 5.1(v)(ii), or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in clause (B) of this Sect ion 5.1(v)(ii) at the end of a Fiscal Year, shall not constitute a default or an Event of Default hereunder so long as the Commission has complied with clause (A) and clause (B) of this Section 5.1(v)(ii) at the commencement of the succeeding Fiscal Year.
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1.19. The first sentence of Section 5.2(a) of the Agreement is hereby amended and as so amended shall be restated to read as follows:

Subject to Section 5.1(c) hereof, directly or indirectly amend, supplement or terminate any of the Basic Documents or the Water Bonds Indenture, except that (i) the Commission may amend or modify, or permit to be amended or modified, any of the Basic Documents (as and to the extent the Commission’s participation is required for such purpose) or the Water Bond Indenture in a manner (A) not relating to the duties, obligations or rights of the Bank, under this Agreement and (B) not having a material adverse effect on (x) the ability of the Commission to pay when due the principal of or interest on the Series A -1/A-1-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note or (y) the security, rights or remedies of the Bank hereunder or under any Basic Document or the Bank Note, without the prior written consent of the Bank; and (ii) the Commission may amend the Offering Memorandum to update information relating to any entity described therein other than the Bank.

1.20. Section 5.2(f ) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(f) Issue Debt. (1) Issue any Water Enterprise Debt unless:
(i) no “event of default” shall have occurred and be continuing under the agreement or instrument pursuant to which any outstanding Water Enterprise Debt was issued or incurred and no event shall have occurred which, but for the passage of time or the giving of notice, would constitute an “event of default” under any such agreement or instrument;
(ii) such Water Enterprise Debt will not exceed at any time any limitation set forth in the Constitution or other laws of the State, the Charter, the Board Proceedings, the Commission Resolutions, any other resolutions adopted by the Commission, or the Issuing and Paying Agent Agreement; (iii) (A) prior to the Amendment Effective Date,
(w) If any portion of the proceeds of such Series of Senior Water Bonds or Subordinated Water Bonds is to be used to finance construction of a Project, the Commission shall provide to the Bank a certificate of the Consulting Engineers setting forth (A) the estimated date of completion for the portion of the Project for which such Series of Senior Water Bonds or Subordinated Water Bonds is being issued and for any other uncompleted portion of the Project, and (B) an estimate of the cost of construction of such portion of the Project and of any other uncompleted portion of the Project.
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(x) The Commission shall provide to the Bank a Certificate of the Commission setting forth for each of the next three Fiscal Years (and if any portion of the proceeds of such Series of Senior Wa ter Bonds or Subordinated Water Bonds is to be used to finance construction, the three Fiscal Years following the Fiscal Year in which the Consulting Engineers estimate such portion of the Project will be completed) estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues. (y) Prior to the issuance of any additional Senior Water Bonds or Subordinated Water Bonds , the Commission shall provide to the Bank a certificate setting forth, for each of the next three Fis cal Years, (A) estimated Net Revenues, as set forth in paragraph (x) above, for each of such three Fiscal Years (and, if any portion of the proceeds of such Senior Debt are to be used to finance construction, the three Fiscal Years following the Fiscal Year in which the Consulting Engineers estimate such portion of the Project will be completed), (B) the Annual Debt Service for each of such Fiscal Years (taking into account the issuance of such additional indebtedness), including Annual Debt Service as estimated in such certificate of the Commission with respect to future Senior Water Bonds or Subordinated Water Bonds, if any, which the Commission estimates will be required to complete payment of the cost of construction of such portion of the Project and any other uncompleted portion of the Project, and (C) demonstrating that the estimated Net Revenues (together with any fund balances of the Commission which are available for the payment of Debt Service but excluding the Bond Reserve Fund) in each of the Fis cal Years set forth in paragraph (x) above is at least equal to 1.25 times the Annual Debt Service for each of such respective Fiscal Years.

Provided, however , that any refunding Senior Water Bonds or Subordinated Water Bonds shall be issued in compliance with the Water Bond Indenture or Subordinated Water Bonds Indenture under which such Senior Water Bonds or Subordinated Water Bonds, as applicable, were issued and shall not be subject to this Section 5.2(f)(1)(iii).
(B) On and after the Amendment Effecti ve Date,
(w) If any portion of the proceeds of such Series of Senior Water Bonds or Subordinated Water Bonds is to be used to finance construction of a Project after the sale of the additional Series of Senior Water Bonds or Subordinated Water Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall provide to the Bank the following documents; these documents shall, with respect to such Series of Senior Water Bonds or Subordinated Water Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof (except that, with respect to Variable Rate Indebtedness (as defined in the Water Bonds Indenture), the interest rate for the Series of Senior Water Bonds or Subordinated -15-
Water Bonds shall be calculated in accordance with the provisions of subsection (iv) of the definition of Maximum Annual Debt Service). (I) A Certificate of the Commission setting forth for each of the next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues.
(II) A Certificate of the Commission demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Senior Water Bonds or Subordinated Water Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Senior Water Bonds or Subordinated Water Bonds, will not be less than 1.25:1; or (2) the ratio of (A) Net Revenues projected by the Commission for each of the next three Fiscal Year s as determined in clause (I) immediately above, and including in such projections amounts projected to be received from any adopted rate increases (but excluding the Bond Reserve Fund (as defined in the Water Bonds Indenture), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Senior Water Bonds or Subordinated Water Bonds , will not be less than 1.25:1 in each of such Fiscal Years.

Provided, however, that any refunding Senior Water Bonds or Subordinated Water Bonds shall be issued in compliance with the Water Bond Indenture or Subordinated Water Bonds Indenture under which such Senior Water Bonds or Subordinated Water Bonds, as applicable, were issued and shall not be subject to this Section 5.2(f)(1)(iii).
(iv) prior to the issuance of any additional Senior State Loans, the Commission shall provide to the Bank a certificate setting forth, for each of the next three Fiscal Years after the delivery of such Senior State Loans (A) the Water Enterprise Revenues, Operation and Maintenance Costs of the Enterprise and Net Revenues (assuming the delivery of the Senior State Loans) and (B) the Annual Debt Service, (assuming the delivery of the Senior State Loans) and demonstrati ng that the estimated Net Revenues (together with any fund balances of the Commission which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such Fiscal Years is at least 1.25 times the Annual Debt Service in each of such Fi scal Years;
(v) prior to the issuance of any additional Water Enterprise Debt, the Commission shall provide to the Bank a certificate certifying that either (x) the actual revenues of the Water Enterprise for the most recently completed Fiscal Year and (y) projected revenues for the next three (3) Fiscal Years following the issuance of such additional Water Enterprise Debt are or will be sufficient to satisfy the covenant set forth in Section 5.1(u) hereof; -16-
(vi) the issuance of Parity Debt will not result in the creation of a Lien on the Available Water Enterprise Revenues that is senior to the Lien securing the Series A -1/A-1-T Commercial Paper Notes or the obligations under this Agreement, the Fee Agreement and the Bank Note;
(vii) if Such Water Enter prise Debt consists of Commercial Paper Notes or Parity Notes, the aggregate principal amount of such Commercial Paper Notes and Parity Notes and any amounts outstanding under the Bank Note and any Parity Bank Notes outstanding does not exceed $750,000,000 in aggregate principal amount;
(viii) notwithstanding anything herein to the contrary, if such Water Enterprise Debt consists of Subordinated Water Bonds, the Commission shall not issue any Subordinated Water Bonds without the Bank’s prior written consent thereto; provided, for purposes of clarity, that this clause (viii) shall not apply to Senior State Loans;
(ix) no Default or Event of Default shall have occurred and be continuing hereunder as a result thereof.
(2) The Commission will not issue Debt secured by or payable from the Water Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Bank Note other than Senior Debt.

1.21. Section 6.1(j) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
(j) the Commission shall (i) default on the payment of the principal of or interest on any Water Enterprise Debt, beyond the period of grace, if any, provided in t he instrument or agreement under which such Water Enterprise Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Water Enterprise Debt, including, without limitation, any Bank Agreeme nt, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required), or result in, any such Water Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Water Enterprise Debt;

1.22. Section 6.1(k) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
-17-
(k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Water Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Water Enterprise Debt) was created or incurred; or (ii) default in the observance or perfor mance of any agreement or condition relating to any Debt (other than Water Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) , or result in, any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Water Enterprise Debt);

1.23. The proviso at the end of Section 7.5(a) of the Agreement is hereby amended and as so amended shall be r estated to read as follows:
provided that the Commission shall not be required to indemnify the Bank for any claims, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the gross negligence or willful misconduct of the Bank as determined by a court of competent jurisdiction by final and nonappealable judgment.

1.24. The proviso at the end of the first sentence of Section 7.5(b) of the Agreement is hereby amended and as so amended shall be restated to read as follows:
provided that the Commission shall not be required to indemnify the Bank, to the extent, but only to the extent, any such claim, damage, loss, liability, cost or expense is caused by the Bank’s willful misconduct or gross negligence as determined by a court of competent jurisdiction by final and nonappealable judgment.

1.25. Article VII of the Agreement is hereby amended to include a new Section 7.23 to read as follows and to appear in the appropriate numerical sequence:

Section 7.23. QFC Provisions. To the extent that the Basic Documents provide support, through a guarantee or otherwise, for any agreement or instrument that is a QFC (such support, “QFC Credit Support,” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd- Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes” ) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Basic Documents and any Supported QFC -18-
may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) Acknowledgment Regarding Supported QFCs . In the
event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Suppor ted QFC or such QFC Credit Support ) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Basic Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Basic Documents were governed by the laws of the United States or a state of the United States. (b) Limitation on the Exercise of Certain Rights Related to Affiliate Insolvency Proceedings with Respect to Any Supported QFCs .

Notwithstanding anything to the contrary in the Basic Documents or any other agreement, but without prejudice to the requirements of the preceding paragraph (a), Default Rights under the Basic Documents that might otherwise apply to a Supported QFC or any QFC Credit Support may not be exercised against a Covered Party if such Default Rights are related, directly or indirectly, to a BHC Act Affiliate of such Covered Party becoming subject to Insolvency Proceedings, except to the extent such exercise would be permitted under 12 C.F.R. § 252.84, 12 C.F.R. § 47.5, or 12 C.F.R. § 382.4, as applicable. After a BHC Act Affiliate of a Covered Party has become subject to Insolvency Proceedings, if any party to the Basic Document s, any Supported QFC or any QFC Credit Support seeks to exercise any Default Right against such Covered Party with respect to such Supported QFC or such QFC Credit Support, the party seeking to exercise such Default Right shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted hereunder.

2. R
EQUEST FOR EXTENSION OF STATED EXPIRATION DATE.
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The Commission hereby requests that the Bank extend the Stated Expiration Date to February [__], 2030, and the Bank agrees to such request and will deliver to the Issuing and Paying Agent an Amendment to the Letter of Credit substantially in the form attached hereto as Exhibit A (the “Letter of Credit Amendment” ) to effectuate such extension .

SECTION 3. CONDITIONS PRECEDENT.

This Amendment shall be effective as of the Amendment Date and the Bank shall execute and deliver the Letter of Credit Amendment, in each case, subject to the satisfaction of or waiver by the Bank of all of the following conditions pr ecedent:

3.01. Delivery by the Commission of an executed counterpart of (i) this Amendment and (ii) the Amended and Restated Fee Agreement dated the date hereof (the “Fee Agreement”), by and between the Commission and the Bank.

3.02. Delivery to the Bank of an opinion of counsel to the Commission, addressed to the Bank and in form and substance satisfactory to the Bank and its counsel.

3.03. Receipt by the Bank of a certified copy of the authorizing resolution of the Commission approving the execution and delivery and performance of its obligations under the Agreement and the Fee Agreement .

3.04. Receipt by the Bank of a customary certificate executed by appropriate officers of the Commission including the incumbency and signature of the officer of the Commission executing this Amendment and the Fee Agreement .

3.05. Payment to the Bank on the Amendment Date of the reasonable legal fees and expenses of counsel to the Bank as provided in the Fee Agreement .

3.06. All other legal matters pertaining to the execution and delivery of this Amendment shall be satisfactory to the Bank and its counsel.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMMISSION .

4.01. The Commission hereby represents and warrants that the following statements shall be true and correct as of the date hereof:
(a) the representations and warranties of the Commiss ion contained in Article Four of the Agreement , as amended hereby, and in each of the Basic Documents are true and correct on and as of the date hereof as though made on and as of such date and are hereby remade by the Commission on the date hereof (except to the extent the same expressly relate to an earlier date and except that the represen tations contained in Section 4.6 of the Agreement shall be deemed to refer to the most recent financial statements of the Commission delivered to the Bank pursuant to S ection 5.1(a)(i) of the Agreement); and
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(b) no Default or Event of Default has occurred and is continuing or would result from the execution of this Amendment.

4.02. In addition to the representations given in Article Four of the Agreement, the Commission represents and warrants to the Bank as follows:
(a) The execution, delivery and performance by the Commission of this Amendment and the Fee Agreement and the performance by the Commission of the Agreement, as amended hereby, are within its powers, have been duly authorized by all necessary action and do not contravene any law, rule or regulation, any judgment, order or decree or any contractual restriction binding on or affecting the Commission . (b) No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Commission of this Amendment or the Fee Agreement or the performance by the Commission of the Agreement, as amended hereby. (c) This Amendment and the Fee Agreement have been duly executed and delivered and this Amendment, the Fee Agreement , and the Agreement, as amended hereby, constitute legal, valid and binding obligations of the Commission, enforceable against the Commission in accordance with their respective terms, except as enforcement thereof may be limited by laws relating to bankruptcy, reorganization, insolvency, or other similar laws affecting the enforcement of creditors’ rights generally or by usual limitations on the availability of equitable remedies.

S
ECTION 5. MISCELLANEOUS .

5.01. Except as specifically amended herein, the Agreement shall continue in full force and effect in accordance with its terms . Reference to this Amendment need not be made in any note, document, agreement, letter, certificate, the Agreement or any communication issued or made subsequent to or with respect to the Agreement, it being hereby agreed that any reference to the Agreement shall be sufficient to refer to, and shall mean and be a reference to, the Agreement, as hereby amended. In case any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby. T HIS

AMENDMENT SHALL BE DEEMED TO BE A CONTRACT UNDER , AND FOR ALL PURPOSES SHALL BE

GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STA TE

OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAWS 5-1401 AND 5-1402); PROVIDED, THAT THE OBLIGATIONS OF

THE COMMISSION HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CHOICE OF LAW RULES . THIS AMENDMENT SHALL BE SUBJECT TO SECTION

7.14 OF THE AGREEMENT.

5.02. This Amendment amends the Agreement but is not intended to be or operate as a novation or an accord and satisfaction of the Agreement or any other Basic Document or the indebtedness, obligations and liabilities of the Commission evidenced or provided for thereunder. -21-
This Amendment does not extinguish the obligations for the payment of money outstanding under the Agreement or any other Basic Document or discharge or release the obligations or the liens or priority of any pledge or any other security therefor.

5.03. This Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. This Amendment may be delivered by the exchange of signed signature pages by facsimile transmission or by e-mail with a pdf copy or other replicating image attached, and any printed or copied version of any signature page so delivered shall have the same force and effect as an originally signed version of such signature page.
[S
IGNATURE PAGE TO FOLLOW]

Signature Page to First Amendment to Reimbursement Agreement IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the Amendment Date .

PUBLIC UTILITIES COMMISSION OF THE CITY AND

COUNTY OF SAN FRANCISCO
By:

Name: _______________________________
Title: _______________________________
Approved as to Form:
________________________
City Attorney of the City and
County of San Francisco

By: __________________________________
Name: _______________________________
Title: ________________________________

Acknowledged:

_______________________
Director of the Office of Public Finance
of the City and County of San Francisco

Signature Page to First Amendment to Reimbursement Agreement

SUMITOMO MITSUI BANKING CORPORATION ,
acting through its New York Branch
By ____________________________________
Name: _________________________________
Title: _________________________________

EXHIBIT A

ANNEX G
TO

SUMITOMO MITSUI BANKING CORPORATION,

ACTING THROUGH ITS NEW YORK BRANCH

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. LG/MIS/NY-192094

NOTICE OF EXTENSION OF STATED EXPIRATION DATE

U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
[Date]
We hereby notify you with reference to Irrevocable Transferable Direct -Pay Letter of Credit No. LG/MIS/NY -192094 (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, as follows:

1. The St ated Expiration Date of the Letter of Credit has been extended to February [__], 2030.

2. This Notice is an amendment to and must be attached to the Letter of Credit and made a part thereof.
[Transfer changes to come]
All other terms and conditions of the Letter of Credit remain unchanged.

Very truly yours,
S

UMITOMO MITSUI BANKING
CORPORATION , acting through its New York
Branch
By: ____________________________________
Name: ______________________________
Title: _______________________________

CHAPMAN DRAFT
JANUARY 13, 2025
1304418670-2__amended_and_restated_fee_agreement__water_a_1_smbc___3_ 4428512

AMENDED AND RESTATED

FEE AGREEMENT
February 18, 2025
$100,000,000
not to exceed aggregate principal amount of
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Water Series, Proposition E)
Tax-Exempt Subseries A-1 and Taxable Subseries A-1-T
Reference is hereby made to that certain (i) Reimbursement Agreement, dated as of May 1, 2021 (as it may be amended and supplemented from time to time in accordance with its terms, the “Reimbursement Agreement”), by and between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and Sumitomo Mitsui Banking Corporation, acting through its New York Branch (the “Bank”), and (ii) the Fee Agreement dated May 18, 2021 (the “Original Fee Agreement” ), between the Commission and the Bank. Capitalized t erms used herein without definition shall have the meanings assigned to such terms in the Reimbursement Agreement.

The Commission has requested that the Bank make certain modificati ons to the Original Fee Agreement, and, for the sake of clarity and convenience, the Bank and the Commission wish to amend and restate the Original Fee Agreement in its entirety, and this Amended and Restated Fee Agreement dated February 18, 2025 (as it ma y be amended and supplemented from time to time in accordance with its terms, this “Fee Agreement” ) amends and restates the Original Fee Agreement in its entirety. The Commission acknowledges and agrees that all fees previously paid to the Bank under the Original Fee Agreement were fully earned and nonrefundable. The purpose of this Fee Agreement is to confirm the agreement between the Commission and the Bank with respect to fees and other amounts payable to the Bank and to set forth certain other information with respect to the Reimbursement Agreement and Letter of Credit . This is the Fee Agreement referenced in the Reimbursement Agreement, and the terms hereof are incorporated by reference into the Reimbursement Agreement as if fully set forth therein .

In consideration for and in order to induce the Bank to extend the Stated Expiration Date of the Letter of Credit pursuant to the terms and conditions set forth in the Reimbursement Agreement, the parties hereto agree as follows:
(a) Facility Fee. The Commission agrees to pay to the Bank on April 1, 2025 for the period commencing on January 1, 2025 and ending on March 31, 2025, and on the first Business Day of each July, October , January and April to occur thereafter, and on the Termination Date (each, a “Quarterly Payment Date” ), a non- refundable facility fee (the “Facility Fee”), which -2-
shall be fully earned when due and nonrefundable when paid, computed in arrears (on the basis of a 365 day year for the actual number of days elapsed per quarter) in an amount equal to the product of (x) the Stated Amount of the Letter of Credit (without regard to te mporary reductions thereof) for each day during each related period multiplied by (y) the applicable rate per annum specified below based on the Rating (as defined below) corresponding to the applicable Level set forth in the applicable pricing matrix below for each day during each related period (the “Facility Fee Rate”):
(i) For the period commencing on January 1, 2025 to but not including February 18, 2025, a rate per annum equal to:

Level

S&P Rating

Moody’s
Rating

Facility Fee
Rate
Level 1 AA- or above Aa3 or above 0.33%
Level 2 A+ A1 0.53%
Level 3 A A2 0.73%
Level 4 A- A3 1.10%
Level 5 BBB+ Baa1 1.50%
Level 6 BBB Baa2 2.25%
(ii) For the period commencing on and including February 18, 2025, and at all times thereafter, a rate per annum equal to:

Level Fitch Rating S&P Rating
Moody’s
Rating
Facility Fee
Rate
Level 1 AA- or above AA- or above Aa3 or above 0.32%
Level 2 A+ A+ A1 0.47%
Level 3 A A A2 0.67%
Level 4 A- A- A3 1.00%
Level 5 BBB+ BBB+ Baa1 1.50%
Level 6 BBB BBB Baa2 2.25%
The following paragraph applies to each of the pricing matrices above. The term “Rating” as used above shall mean the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt; provided, however, that if the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt appear in more than one rating level, the term “Rating” as used above shall mean the lowest of the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt (for the avoidance of doubt, Level 6 is the Level with the lowest Ratings, and Level 1 is the Level with the highest Ratings for purposes of each pricing matrix above). The Commission acknowledges, and the Bank agrees, that as of the First Amendment Effective Date the Facility Fee Rate is that specified above in paragraph (ii) for Level 1. Any change in the Facility Fee Rate resulting from a change in a Rating shall be and become effective as of and on the date of the announcement of the change in such Rating. References to ratings above are references to rating categories as now determined by the Rating Agencies, and, in the event of adoption of any new or changed rating system by any such Rating Agency, including, without limitation, any recalibration or realignment of the long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt in connection with the adoption of a “global” -3-
rating scale, each of the ratings from the Rating Agency in question referred to above shall be deemed to refer to the rating category under the new rating system which most closely approximates the applicable rating category as currently in effect . In the event that either (i) any long term unenhanced credit ratings assigned by any Rating Agency to any Senior Debt is suspended, withdrawn or otherwise unavailable from any Rating Agency, or reduced below “Baa2” (or its equivalent) by Moody’s or “BBB” (or its equivalent) by S&P or Fitch (to the extent any Senior Debt is rated by Fitch at the request of the Commission) , or (ii) upon the occurrence and during the continuance of an Event of Default, then the Facility Fee Rate otherwise in effect shall be immediately and without notice equal 3.00% per annum . The Facility Fees shall be payable in arrears as provided in this Paragraph (a), together with interest on the Facility Fees from the date payment is due until payment in full at the Default Rate, payable by the Commission on demand and calculated as provided in this Paragraph (a) . (b) Drawing Fee. Upon each drawing under the Letter of Credit, the Commission agrees to pay to the Bank a Letter of Credit drawing fee of $300, payable without any requirement of notice or demand by the Bank on the day on which such drawing is paid by the B ank. (c) Transfer Fee; Amendment Fee. Upon each transfer of the Letter of Credit, the Commission agrees to pay to the Bank the sum of $5,000 plus the reasonable fees and expenses of counsel to the Bank associated with such transfer, payable on the date of such transfer. Upon any amendment of the Letter of Credit, the Reimbursement Agreement or this Fee Agreement, or any amendment of any other Basic Document requiring action on the part of the Bank, the Commission agrees to pay to the Bank the sum of $5,000 plus the reasonable fees and expenses of counsel to the Bank associated with such amendment, payable on the date of such amendment. (d) Termination Fee. If the Letter of Credit terminates by its terms or is replaced, or the Stated Amount of the Letter of Credit is permanently reduced to zero, prior to the one (1) year anniversary of the First Amendment Effective Date, the Commission shall pay to the Bank, upon such termination, replacement or reduction, a termination fee equal to the product of (i) the Facility Fee Rate in effect as of the date of such termination, replacement or reduction, (ii) the Stated Amount (without taking into account any Unpaid Drawing) as of the date of such termination, replacement or reduction, and (iii) a fraction, the nume rator of which is equal to the number of days from and including the date of such termination, replacement or reduction to and including the one (1) year anniversary of the First Amendment Effective Date, and the denominator of which is 360, and shall also pay to the Bank, upon such termination, replacement or reduction, all other fees, expenses and other obligations payable hereunder, including, without limitation, all principal and accrued interest owing on the Bank Note ; provided, however, that the Commission shall not be required to pay any termination fee to the Bank (i) if such termination, replacement or reduction is a result of any of the senior unsecur ed short-term credit ratings of the Bank being downgraded by Moody’s to “P2” or below or by S&P to “A-2” or below, respectively (provided, that for the avoidance of doubt, the ratings referenced in this clause (i) shall mean those ratings assigned to Sumitomo Mitsui Banking Corporation, acting through its New York Branch and not ratings assigned to Sumitomo Mitsui Banking Corporation, acting through its New York Branch’s parent or holding company or any other affiliate of the Bank), or (ii) if such termination, replacement or reduction is a result of additional amounts becoming due pursuant to Section 2.14 of the -4-
Reimbursement Agreement. All payments from the Commission to the Bank referred to in this paragraph (d) shall be made with immediately available funds. (e) Reduction Fee. If the Stated Amount of the Letter of Credit is permanently reduced to an amount greater than zero prior to the one (1) year anniversary of the First Amendment Effective Date, the Commission shall pay to the Bank, upon such reduction, a reduction fee in an amount equal to the product of (i ) the Facility Fee Rate in effect as of the date of such reduction, (ii) the difference between the Stated Amount prior to such reduction (without taking into account any Unpaid Drawing) and the Stated Amount after such reduction (without taking into account any Unpaid Drawing), and (iii) a fraction, the numerator of which is equal to the number of days from and including the date of such reduction to and including the one (1) year anniversary of the First Amendment Effective Date, and the denominator of which is 360, and shall also pay to the Bank, upon such reduction, all other fees, expenses and other obligations payable hereunder, including, without limitation, all principal and accrued interest owing on the Bank Note; provided, however, that the Commission shall not be required to pay any reduction fee to the Bank (i) if such reduction is a result of any of the senior unsecur ed short-term credit ratings of the Bank being downgraded by Moody’s to “P2” or below or by S&P to “A -2” or below, respectively (provided, that for the avoidance of doubt, the ratings referenced in this clause (i) shall mean those ratings assigned to Sumitomo Mitsui Banking Corporation, acting through its New York Branch and not ratings assigned to Sumitomo Mitsui Banking Corporation, acting through its New York Branch’s parent or holding company or any other affiliate of the Bank) , or (ii ) if such reduction is a result of additional amounts becoming due pursuant to Section 2.14 of the Reimbursement Agreement .

All payments from the Commission to the Bank referred to in this paragraph (e) shall be made with immediately available funds.
(f) Expenses. Upon receipt of a written invoice by mail, the Commission will promptly pay (i ) the reasonable fees and expenses of counsel (both foreign and domestic) to the Bank incurred in connection with the preparation, execution and delivery, and administration of the Reimbursement Agreement, the Letter of Credit, this Fee Agreement and the other Basic Documents or any amendments thereto , (ii) the reasonable out -of-pocket expenses of the Bank incurred in connection with the preparation, execution and delivery, and administration of the Reimbursement Agreement, the Letter of Credit, this Fee Agreement and the other Basic Documents or any amendments thereto, (iii) the fees and disbursements of counsel (both foreign and domestic) to the Bank with respect to advising the Bank as to the rights and responsibilities under the Reimbursement Agreement after the occurrence of an Event of Default, and (iv) all costs and expenses, if any, in connection with the administration and enforcement of the Reimbursement Agreement and any other documents which may be delivered in connection therewith, including in each case the fees and disbursemen ts of counsel (both foreign and domestic) to the Bank. In addition, and notwithstanding the foregoing, the Commission agrees to pay, after the occurrence of an Event of Default, all costs and expenses (including attorneys’ fees and costs of settlement) incurred by the Bank in enforcing any obligations or in collecting any payments due from the Commission hereunder by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided unde r the Reimbursement Agreement in the nature of a “workout” or of any insolvency or bankruptcy proceedings . The obligations of the Commission under this paragraph (f) shall survive the termination of the Reimbursement Agreement.
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(g) Payment Account. “Payment Account” shall mean the following account of the Bank (or at such other place as the Bank may specify by written notice to the Commission and the Trustee):

Sumitomo Mitsui Banking Corp., New York
ABA Number: 0260-0967-4
Account Name: SMBC Loan Operations New York
Account Number: 423001
Re: San Francisco Public Utilities Commission, LG/MIS/NY -154139 Contact: (212) 224-4310
(h) Notices. All notices and other communications to the Bank provided for under the Reimbursement Agreement shall be in writing (including required copies) and sent by receipted hand delivery (including Federal Express or other receipted courier service), telecopy, facsimile transmission, or regular mail, to the following addresses (or to such other address(es) of which the Bank shall notify the parties to the Reimbursement Agreement):
if to the Bank with respect to
draws under the Letter of
Credit, to:

Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 6th Floor
New York, New York 10172
Attention: Trade Credit Services Department
Telephone: (212) 224-4310
Facsimile: (212) 224- 4566
Email:
[email protected]

if to the Bank with respect to
administrative matters, to:

Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 4th Floor
New York, New York 10172
Attention: General Manager - Public and
Infrastructure Finance Group
Telephone: (212) 224-4859
Facsimile: (212) 224- 5227
Email:

[email protected]

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With a copy to:

Sumitomo Mitsui Banking Corporation,
New York Branch
277 Park Avenue, 6th Floor
New York, New York 10172
Attention: Trade Credit Services Department
Telephone: (212) 224-4310
Facsimile: (212) 224- 4566
Email: [email protected]
(i) No amendment or waiver of any provision of this Fee Agreement, or consent to any departure by the Commission therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank and an Authorized Representative of the Commission, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Neither any failure nor any delay on the part of the Bank in exercising any right, power or privilege hereunder, nor any course of dealing with respect to any of the same, shall operate as a waiver thereof, preclude any other or further exercise thereof nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative, and not exclusive of any remedies provided by law . To the extent of any conflict between this Fee Agreement, the Reimbursement Agreement, the Letter of Credit, and any other Basic Documents, with respect to the subject matter hereof, this Fee Agreement shall control solely as between the Commission and the Bank.
(j) Any provision of this Fee Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provi sions hereof or affecting the validity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law . The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
(k) T

HIS FEE AGREEMENT SHALL BE GOVERNED BY , AND CONSTRUED IN ACCORDANCE

WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS; PROVIDED THAT THE BANK’S OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY, AND

CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD T O CONFLICTS OF LAWS PROVISIONS . THIS FEE AGREEMENT SHALL BE SUBJECT TO SECTION 7.14 OF THE REIMBURSEMENT AGREEMENT.
(l) This Fee Agreement may be executed in two or more counterparts, each of which shall constitute an original, but when taken together shall constitute but one agreement and any of the parties hereto may execute this Fee Agreement by signing any such counterpart. This Fee Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by attaching a pdf copy or other replicating image to an email, and any printed or copied version -7-
of any signature page so delivered shall have the same force and effect as an originally signed version of such signature page.
(m) This Fee Agreement represents the final agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties hereto as to such subject matter . (n) This Fee Agreement and the Reimbursement Agreement shall be construed as one agreement between the Commission and the Bank and shall be governed by the provisions of the Reimbursement Agreement.
(o) Unless required by law, the Commission shall not deliver or permit, authorize or consent to the delivery of this Fee Agreement to any Person for delivery to the Municipal Securities Rulemaking Board unless the Bank provides its prior written consent. (p) This Fee Agreement amends and restates in its ent irety the Original Fee Agreement but is not intended to be or operate as a novation or an accord and satisfaction of the Original Fee Agreement or the indebtedness, obligations and liabilities of the Commission evidenced or provided for thereunder. The parties hereto agree that this Fee Agreement does not extinguish or discharge the obligations of the Commission under the Original Fee Agreement. Reference to this specific Fee Agreement need not be made in any agreement, document, instrument, letter or certificate, the Original Fee Agreement itself or any communication issued or made pursuant to or with respect to the Original Fee Agreement , any reference to the Original Fee Agreement being sufficient to refer to the Original Fee Agreement as amended and re stated hereby, and more specifically, any and all references to the Fee Agreement in the Agreement or any related instrument or document shall mean this Fee Agreement.
[The remainder of this page intentionally left blank]

Signature Page to Amended and Restated Fee Agreement
(Water Series, Proposition E) Tax Exempt Subseries A-1 and Taxable Subseries A-1-T IN WITNESS WHEREOF, the parties hereto have caused this Fee Agreement to be duly executed and delivered by their respective officer s thereunto duly authorized as of the date first above written.

PUBLIC UTILITIES COMMISSION OF THE CITY

AND COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: ______________________________
Title: _______________________________
Approved as to Form:
__________________________,
City Attorney of the City and County of San Francisc o
By: ____________________________________
Name: ______________________________
Title: _______________________________

Acknowledged:
__________________________,
Director of Public Finance of the City and County of San Francisco By: ____________________________________
Name: ______________________________
Title: _______________________________

Signature Page to Amended and Restated Fee Agreement
(Water Series, Proposition E) Tax Exempt Subseries A-1 and Taxable Subseries A-1-T

SUMITOMO MITSUI BANKING CORPORATION ,
acting through its New York Branch
By: ____________________________________
Name: Eric Isban
Title: Managing Director

CHAPMAN DRAFT
JANUARY 27, 2025
1304418671-3__reimbursement_agreement__2024_water___pnc__4912_3941_9657_v13 4458097

REIMBURSEMENT AGREEMENT
Dated as of February 1, 2025
between

PUBLIC UTILITIES COMMISSION OF

THE CITY AND COUNTY OF SAN FRANCISCO
and

PNC BANK, NATIONAL ASSOCIATION
relating to:
$150,000,000

PUBLIC UTILITIES COMMISSION

OF THE CITY AND COUNTY OF SAN FRANCISCO

COMMERCIAL PAPER NOTES
(WATER SERIES, PROPOSITION E)
TAX-EXEMPT SUBSERIES A-4
TAXABLE SUBSERIES A-4-T

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TABLE OF CONTENTS
PAGE
ARTICLE ONE DEFINITIONS .......................................................................................................3 Section 1.1. Definitions....................................................................................................3 Section 1.2. Interpretations ............................................................................................16 Section 1.3. Accounting Terms ......................................................................................16 Section 1.4. Letter of Credit Amounts ...........................................................................16 ARTICLE TWO LETTER OF CREDIT............................................................................................16 Section 2.1. Issuance of Letter of Credit........................................................................16 Section 2.2. Letter of Credit Drawings ..........................................................................16 Section 2.3. Reimbursement ..........................................................................................17 Section 2.4. Advances; Term Loans ..............................................................................17 Section 2.5. Fee 19
Section 2.6. The Bank Note ...........................................................................................19 Section 2.7. Termination or Replacement of Letter of Credit Permanent Reduction of Stated Amount......................................................................................20 Section 2.8. Computation of Interest and Fees ..............................................................20 Section 2.9. Payment Due on Non-Business Day to Be Made on Next Business Day..21 Section 2.10. Late Payments ............................................................................................21 Section 2.11. Source of Funds .........................................................................................21 Section 2.12. Extension of Stated Expiration Date ..........................................................21 Section 2.13. Taxes ..........................................................................................................21 Section 2.14. Increased Costs; Capital or Liquidity Requirements .................................23 Section 2.15. Margin Regulations ....................................................................................24 Section 2.16. Maximum Rate; Payment of Fee ...............................................................25 Section 2.17. Security of Obligations ..............................................................................25 Section 2.18. Commercial Paper Operations ...................................................................25 Section 2.19. Method of Payment; Etc. ...........................................................................26 ARTICLE THREE CONDITIONS PRECEDENT ..................................................................................26 Section 3.1. Conditions Precedent to Effectiveness.......................................................26 ARTICLE FOUR REPRESENTATIONS AND WARRANTIES..............................................................29 Section 4.1. Organization, Powers, Etc..........................................................................29 Section 4.2. Authorization, Absence of Conflicts, Etc. .................................................29 Section 4.3. Binding Obligations; Security for Bank Note ............................................30 Section 4.4. Governmental Consent or Approval ..........................................................30 Section 4.5. Absence of Material Litigation ..................................................................30 Section 4.6. Financial Condition ....................................................................................31 Section 4.7. Incorporation of Representations and Warranties......................................31 Section 4.8. Accuracy and Completeness of Information..............................................31 -ii-
Section 4.9. No Default ..................................................................................................32 Section 4.10. No Proposed Legal Changes ......................................................................32 Section 4.11. Compliance with Laws, Etc. ......................................................................32 Section 4.12. Environmental Matters...............................................................................32 Section 4.13. Tax Status of Interest on Series A-4 Commercial Paper Notes .................33 Section 4.14. Issuing and Paying Agent; Dealers ............................................................33 Section 4.15. Regulation U ..............................................................................................33 Section 4.16. Liens ...........................................................................................................33 Section 4.17. Sovereign Immunity...................................................................................33 Section 4.18. City Business Days ....................................................................................33 Section 4.19. Usury ..........................................................................................................34 Section 4.20. Insurance ....................................................................................................34 Section 4.21. ERISA ........................................................................................................34 Section 4.22. Sanctions Concerns and Anti-Corruption Laws.........................................34 Section 4.23. Swap Contracts ..........................................................................................34 ARTICLE FIVE COVENANTS ......................................................................................................35 Section 5.1. Affirmative Covenants ...............................................................................35 Section 5.2. Negative Covenants ...................................................................................45 ARTICLE SIX DEFAULTS .........................................................................................................51 Section 6.1. Events of Default and Remedies ................................................................51 Section 6.2. Remedies ....................................................................................................54 ARTICLE SEVEN MISCELLANEOUS ..............................................................................................54 Section 7.1. Amendments, Waivers, Etc........................................................................54 Section 7.2. Notices .......................................................................................................55 Section 7.3. Survival of Covenants; Successors and Assigns ........................................55 Section 7.4. Unconditional Obligations .........................................................................56 Section 7.5. Liability of Bank; Indemnification ............................................................57 Section 7.6. Expenses ....................................................................................................58 Section 7.7. No Waiver; Conflict. ..................................................................................59 Section 7.8. Modification, Amendment, Waiver, Etc. ...................................................59 Section 7.9. Dealing with the Commission, the Issuing and Paying Agent, and/or the Dealer ...................................................................................................59 Section 7.10. Severability ................................................................................................59 Section 7.11. Counterparts ...............................................................................................59 Section 7.12. Table of Contents; Headings ......................................................................59 Section 7.13. Entire Agreement .......................................................................................59 Section 7.14. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial ..............................................................................................................60 Section 7.15. Governmental Regulations.........................................................................60 Section 7.16. USA PATRIOT Act ...................................................................................61 Section 7.17. Electronic Transmissions ...........................................................................61 Section 7.18. Assignment to Federal Reserve Bank ........................................................61 -iii-
Section 7.19. City Requirements......................................................................................61 Section 7.20. No Advisory or Fiduciary Responsibility ..................................................61 Section 7.21. Redaction ...................................................................................................62 Section 7.22. Notice of New Addresses Under Basic Documents...................................62 Section 7.23. US QFC Stay Rules ...................................................................................62

APPENDIX I FORM OF LETTER OF CREDIT

EXHIBIT A FORM OF BANK NOTE

EXHIBIT B FORM OF COMPLIANCE CERTIFICATE
EXHIBIT C 2025 LIST OF CITY HOLIDAYS

EXHIBIT D CITY REQUIREMENTS

REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT dated as of February 1, 2025 (together with any amendments or supplements hereto, this “Agreement”), is between the P UBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (together with its permitted successors and assigns, the “Commission”) and PNC Bank, National Association (together with its successors and assigns, the “Bank”).

WITNESSETH:

WHEREAS, on November 5, 2002, the voters of the City and County of San Francisco (the “City”) approved Proposition E (codified at Charter Section 8B.124, but hereinafter referred to as “Proposition E”), which among other things, authorized the Commission to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City and County of San Francisco (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or clean water facilities or combinations of water and clean wat er facilities under the jurisdiction of the Commission (the “ Water Enterprise, ” as further defined herein); and WHEREAS, pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203-98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City and County of San Francisco (the “Mayor”) on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board established a procedure pursuant to which the Commission may issue short -term indebtedness, including the issuance of commercial paper notes in anticipation of the issuance of its water revenue bonds; and WHEREAS, as of [__________], 20[__], the Board has authorized the issuance from time to time of up to $1,887,552,493 aggregate principal amount of water revenue bonds under Proposition E pursuant to Section 9.107 of the Charter of the City (the “Charter”), Ordinance No. 174-20 adopted by the Board on September 29, 2020 and signed by the Mayor on October 1, 2020, Ordinance No. 112-22, adopted by the Board on June 14, 2022 and signed by the Mayor on June 24, 2022, Ordinance No. 180- 23, adopted by the Board on July 25, 2023 and signed by the Mayor on July 28, 2023, and Ordinance No. 131- 24 adopted by the Board on June 18, 2024 and signed by the Mayor on June 27, 2024; and
WHEREAS, the Commission has previously authorized, pursuant to Resolution No. 03-0048, adopted by the Commission on March 25, 2003 ( “Resolution No. 03-0048”), and the Board previously approved, pursuant to Resolution No. 300-03, adopted by the Board on May 6, 2003 and signed by the Mayor on May 16, 2003 ( “Resolution No. 300-03”) and Proposition E, the establishment of a commer cial paper program for the City’ s Water Enterprise and the issuance of Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series) in an aggregate principal amount not to exceed $250,000,000; and
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WHEREAS, the Commission has previously authorized, pursuant to Resolution No. 08- 0202, adopted by the Commission on October 30, 2008 (“Resolution No. 08- 0202”), and the Board approved, pursuant to Ordinance No. 311-08, adopted by the Board on December 16, 2008, and signed by the Mayor on December 19, 2008 ( “Ordinance No. 311-08”), and Proposition E, an increase in the maximum aggregate principal amount of commercial paper notes issued by the Commission that can be outstanding from $250,000,000 to an amount not exceeding $500,000,000 in aggregate principal amount; and
WHEREAS, the Commission has authorized, pursuant to Resolution No. 24- 0193, adopted by the Commission on September 10, 2024 (“Resolution No. 24- 0193”), and the Board has approved, pursuant to Ordinance No. 269-24 ( “Ordinance No. 269- 24” and collectively with Resolution No. 300-03 and Ordinance No. 311- 08, the “Board Proceedings” ), adopted by the Board on November 19, 2024, and signed by the Mayor on November 25, 2024, an increase in the maximum principal amount of short-term indebtedness (including, commercial paper notes) issued by the Commission that be outstanding from $500,000,000 to an amount not exceeding $750,000,000 in aggregate principal amount; and
W
HEREAS, pursuant to Resolution No. 25-[____], adopted by the Commission on February [11], 2025 (the “Commission Resolutions” ), the Commission has authorized, executed and delivered that certain Issuing and Paying Agent Agreement, dated as of February 1, 2025 (the “Issuing and Paying Agent Agreement”), , with U.S. Bank Trust Company, National Association, as issuing and paying agent (the “Issuing and Paying Agent”), pursuant to which the Commission has authorized the issuance of the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-4 and Taxable Subseries A-4-T (the “Series A-4/A-4-T Commercial Paper Notes”); and WHEREAS, the Commission has requested the Bank to issue a letter of credit in the original stated amount of $[163,500,000] (representing an amount supporting the total aggregate principal amount of the Subseries A -4 and Subseries A -4-T Commercial Paper Notes in a aggregate principal amount of $150,000,000 plus an amount equal to 270 days intere st on such principal amount at the rate per annum of twelve percent (12%) computed on the basis of a 360 day year) for the payment by the Issuing and Paying Agent, when and as due, of the principal of and interest on the Subseries A-4 and Subseries A-4-T Commercial Paper Notes; and W
HEREAS, the Bank is willing to issue such letter of credit upon the terms and conditions provided herein.

NOW THEREFORE , in consideration of the premises and the mutual agreements herein contained, the Commission and the Bank a gree as follows:
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ARTICLE ONE

DEFINITIONS
Section 1.1. Definitions. As used in this Agreement:
“2024 Audited Financial Statements” has the meaning set forth in Section 4.6 hereof. “Acceleration Notice” has the meaning set forth in Section 6.2 hereof. “Advance” has the meaning set forth in Section 2.4(a) hereof. “Agreement” has the meaning set forth in the introductory paragraph hereof . “Alternate Facility” has the meaning set forth in the Issuing and Paying Agent Agreement. “Amendment Effective Date” means the date the Proposed Amendments become effective pursuant to Section 187.01 of the Forty- Third Supplemental Indenture. “Annual Budget ” means the budget or budgets prepared by the Commission in substantially the form that has been previously presented to the Bank. “Annual Debt Service” has the meaning set forth in the Water Bonds Indenture; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans. “Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other appli cable Law relating to anti-bribery or anti-corruption in any jurisdiction in which the Commission is located or doing business.
“Anti-Money Laundering Laws” means (a) the Bank Secrecy Act and the Uniting and Strengthening America by Providing Appropriate T ools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001; (b) the U.K. Proceeds of Crime Act 2002, the Money Laundering Regulations 2017, as amended and the Terrorist Asset-Freezing etc. Act 2010; and (c) any other applicable Law relatin g to anti -money laundering and countering the financing of terrorism in any jurisdiction in which the Commission is located or doing business. “Applicable Law” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of all governmental and non- governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity) and arbitrators . “Authorized Representative ” means each of the General Manager of the Commission, Assistant General Manager, Business Services and Chief Financial Officer of the Commission, Deputy Chief Financial Officer of the Commission, and Debt Manager of the Commission, Utility Specialist, Financial Planning of the Commission, Controller of the City and County of -4-
San Francisco, Director of Finance of the City and County of San Francisco, and any other individual designated from time to time as a “Designated Representative” in a certificate executed by the General Manager of the Commission delivered to the Bank. In each case, any such officer referred to in this definition shall include any individual acting in such position on an interim basis in accordance with the Charter or applicable State law . “Available Water Enterprise Revenues” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Bank” has the meaning set forth in the introductory paragraph hereof . “Bank Agreement ” means any credit agreement, liquidity agreement, standby bond purchase agreement, reimbursement agreement, direct purchase agreement, bond purchase agreement, loan agreement, other agreements under which loans are made, or any other agreement or instrument (or any amendment, supplement or other modification thereof) under which, directly or indirectly, any Person or Persons undertake(s) to make or provide funds to make payment of, or to purchase or provide credit enhancement for bonds or notes of the Commission secured by or payable from Water Enterprise Revenues .
“Bank Note” has the meaning set forth in Section 2.6 hereof. “Bank Rate ” means, subject to the terms of Section 2.16 hereof, a rate of interest per annum (i) with respect to an Advance, for any day commencing on the date such Advance is made up to and including the thirtieth (30th) day next succeeding the date such Advance is made, equal to the Base Rate from time to time in effect, (i i) with respect to an Advance, for any day commencing on the thirty- first (31st) day next succeeding the date such Advance is made up to and including the ninetieth (90th) day next succeeding the date such Advance is made, equal to the Base Rate from time to time in effect plus one percent (1.0%); (iii) for any day commencing on the ninety-first (91st) day next succeeding the date the related Advance is made and thereafter, equal to the Base Rate from time to time in effect plus two percent (2.0%); (iv) with respect to an Advance if not converted to a Term Loan, equal to the Default Rate; and (v) with respect to a Term Loan, equal to the Base Rate from time to time in effect plus two percent (2.0%) ; provided, however, that immediately and automatically upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuance of such Event of Default, “Bank Rate” shall mean the Default Rate ; and provided, further, that at no time shall the Bank Rate be less than the highest rate on any outstanding Commercial Paper Notes. “Base Rate” means, for any day, a rate per annum equal to the greatest of ( i) the Prime Rate in effect on such d ay, (i i) the sum of the Federal Funds Rate in effect on such day plus half percent (0.5%), and (i ii) nine percent (9.0%). Each determination of the Base Rate by the Bank shall be conclusive and binding on the Commission absent manifest error . Each change in the Base Rate will take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate, as the case may be. “Basic Documents” means, at any time, each of the following documents or agreements as in effect or as outstanding, as the case may be, at such time: (a) the Series A -4/A-4-T -5-
Commercial Paper Notes , (b) the Commission Resolutions, (c) the Board Proceedings, (d) the Offering Memorandum, (e) the Dealer Agreements, (f) the Issuing and Paying Agent Agreement, (g) the Bank Note, (h) the Fee Agreement, and (i) this Agreement, and any and all future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing. “Blocked Property” means any property: (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by the Bank of any applicable International Trade Law if the Bank were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Board” has the meaning set forth in the recitals hereof . “Board Proceedings” has the meaning set forth in the recitals hereof . “Bond Counsel” has the meaning set forth in the Issuing and Paying Agent Agreement . “Bond Reserve Fund” has the meaning set forth in the Water Bonds Indenture . “Bonds” has the meaning ascribed to the term “ Bonds” in the Water Bonds Indenture. “Business Day” has the same meaning set forth in the Letter of Credit . “Change in Law” means the occurrence, after the Closing Date, of any of the f ollowing:
(a) the adoption or taking effect of any Law, including, without limitation any Risk-Based Capital Guidelines, (b) any change in any Law or in the enforcement, administration, interpretation, implementation or application thereof by any Governmental Authority or compliance by the Bank or any Participant therewith or (c) the making or issuance of any request, rule, ruling, guideline, regulation or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, ( i) the Dodd- Frank Wall Street Reform and Consumer Protection Act (or any other statute referred to therein or amended thereby) and all laws, requests, rules, regulations, policies, rulings, guidelines, regulations, standards or directives thereunder or issued in connection therewith and any interpretation, application or promulgation implementing, invoking or in any way the Dodd- Frank Wall Street Reform and Consumer Protection Act
(ii) all laws, requests, rules, r ulings, standards, policies, guidelines, regulations or directives promulgated by, or in response to requests, guidelines or directives published by, the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities , in each case pursuant to Basel III or any successor Basel accord, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued. “Charter” has the meaning set forth in the Issuing and Paying Agent Agreement . -6-
“City” has the meaning set forth in the Issuing and Paying Agent Agreement . “Closing Date ” means February [__], 2025, which, subject to the satisfaction of the conditions precedent set forth in Section 3.1 hereof, is the date on which the Letter of Credit shall be issued.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations, rulings and judicial decisions promulgated thereunder . “Commercial Paper Notes” means Parity Debt in the form of commercial paper notes. As of the Closing Date, the only Commercial Paper Notes outstanding are the Subseries A1/Subseries A-1-T Commercial Paper Notes, the Subseries A-2/A-2-T Commercial Paper Notes, the Subseries A-3/Subseries A-3-T Notes and the Subseries A-4/Subseries A-4-T Commercial Paper Notes. “Commission” has the meaning set forth in the introductory paragraph hereof, and includes any successor or assign permitted hereby.
“Commission Resolutions” has the meaning set forth i n the recitals hereof . “Compliance Authority” means (a) the United States government or any agency or political subdivision thereof, including, without limitation, the U.S. Department of State, the U.S.

Department of Commerce, the U.S. Department of the Treasury and its Office of Foreign Assets Control, and the U.S. Customs and Border Protection agency; (b) the government of Canada or any agency thereof; (c) the European Union or any agency thereof; (d) the government of the United Kingdom or any agency thereof; (e) the United Nations Security Council; and (f) any other Official Body with jurisdiction to administer Anti- Corruption Laws, Anti -Money Laundering Laws or International Trade Laws with respect to the conduct of a Covered Entity. “Consulting Engineer” has the meaning set forth in the Water Bonds Indenture . “Covered Entity” means (a) the Commission and each of the Commission ’s Subsidiaries; (b) any Person who has pledged (or will pledge) c ollateral hereunder; and (c) each Person that, directly or indirectly, controls a Person described in clause s (a) or (b) above. “Dealers” means the dealer or dealers selected from time to time by the Commission (and acceptable to the Bank) to market the Series A -4/A-4-T Commercial Paper Notes pursuant to the terms of any applicable Dealer Agreement, and any per mitted assigns and successors thereto. “Dealer Agreement” means each dealer agreement, by and between the Commission and a Dealer, in form and substance acceptable to the Bank, as may be amended and supplemented from time to time in accordance with the terms hereof . “Debt” of any Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of -7-
business, (d) all obligations of such Person as lessee under capital leases and finance leases, (e) all Debt of others secured by a lien on any asset of such Person, whether or not such Debt is assumed by such Person, (f) all Guarantees by such Person of Debt of other Persons, (g) all obligations of such Person under any Swap Contract, and (h) all obligations of such Person to reimburse or repay any bank or other Person in respect of amounts paid or advanced under a letter of credit, credit agreement, liquidity facility or other instrument.
“Debt Service” has the meaning set forth in the Water Bonds Indenture ; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans. “Default” means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default . “Default Rate” subject to the terms of Section 2.16 hereof, means, for any day, a per annum rate of interest equal to the highest of (i) the sum of the Prime Rate in effect on such day plus three percent (3.0%) , (ii) the sum of the Federal Funds Rate in effect on such day plus three and half percent (3.5%), and (iii) nine percent (9.0%).
“Drawing” has the meaning set forth in Section 2.3 hereof. “DTC” means The Depository Trust Company, New York, New York, and any successor securities depository.
“Employee Plan” means an employee benefit plan covered by Title IV of ER1SA and maintained for employees of the Commission.
“Enterprise” has the meaning set forth in the Water Bonds Indenture. “Environmental Laws ” means any and all Federal, state and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment i ncluding, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean -up or other remediation thereof . “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto .
“Event of Default” has the meaning set forth in Section 6.1 hereof. “Excluded Taxes” means, with respect to the Bank or any Participant, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the -8-
laws of which the Bank or such Participant is organized or in which its principal office is located, and (b) any branch profits taxes imposed by the United States or any similar ta x imposed by any other jurisdiction in which the Commission is located . “Federal Funds Rate” means for any day the rate per annum (based on a year of 360 days and actual days elapsed) and rounded upward to the nearest 1/100 of 1% announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Rate” as of the date of this Agreement; provided that if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Rate” for such day shall be the Federal Funds Rate for the last day on which such rate was announced. Notwithstanding the foregoing, if the Federal Funds Rate as determined under any method above would be less than zero percent (0.00%), such rate shall be deemed to be zero percent (0.00%) for purposes of this Agreement.
“Fee Agreement” means that certain Fee Agreement dated the Closing Date between the Commission and the Bank, as amended, supplemented, modified or restated from time to time in accordance with its terms .
“Final Drawing Notice” has the meaning set forth in the Letter of Credit . “Fiscal Year” has the meaning set forth in the Issuing and Paying Agent Agreement . “Forty-Third Supplemental Indenture” means the Forty- Third Supplemental Indenture dated as of July 1, 2023, by and between U.S. Bank Trust Company, National Association, as trustee, and the Commission, as amended, supplemented, modified or restated from time to time in accordance with the terms hereof and thereof.
“Funds and Accounts ” means the funds and accounts (other than the Rebate Fund (as defined in the Issuing and Paying Agent Agr eement)) established and maintained pursuant to the Issuing and Paying Agent Agreement with respect to Available Water Enterprise Revenues . “GAAP” means generally accepted accounting principles in the United States as in effect from time to time, applied b y the Commission on a basis consistent with the Commission ’s most recent financial statements furnished to the Bank .
“Governmental Approvals ” means an authorization, consent, approval, license or exemption of, registration or filing with, or report to, any Governmental Authority. “Governmental Authority” means the government of the United States or any other nation or any political subdivision thereof or any governmental or quasi -governmental entity, including any court, department, commission, board, burea u, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of -9-
or pertaining to government, or any arbitrator, mediator or other Person with authority to bind a party at law.
“Government Official” means any officer, employee, official, representative, or any Person acting for or on behalf of any Official Body, government-owned or government-controlled association, organization, business, or enterprise, or public international organization, any political party or official thereof and any candidate for political office. “Guarantees” means, for any Person, all guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations of such Person to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor of another Person against loss . “Indemnified Taxes” means Taxes other than Excluded Taxes . “International Trade Laws” means all Laws relating to economic and financial sanctions, trade embargoes, export controls, customs and anti -boycott measures. “Investment Policy and Guidelines ” means the investment guidelines of the City as in effect on the date hereof, as such investment guidelines may be amended from time to time in accordance with the Issuing and Paying Agent Agreement, the Commission Resolutions, and State laws, as applicable.
“Issuing and Paying Agent” has the meaning set forth in the recitals to this Agreement and includes any successors and assigns .
“Issuing and Paying Agent Agreement ” means that certain Issuing and Paying Agent Agreement, dated as of February [__], 2025, by and between the Commission and U.S. Bank Trust Company, National Association, as issuing and paying agent, as amended, supplemented, modified or restated from time to time in accordance with the terms hereof and thereof. “Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award, or any settlement arrangement, by agreement, consent or otherwise, of any Official Body, foreign or domestic. “Letter of Credit” means the irrevocable letter of credit issued by the Bank for the account of the Commission in favor of the Issuing and Paying Agent supporting the Series A -4/A-4-T Commercial Paper Notes, in the form of Exhibit A hereto, with appropriate insertions, as amended, supplemented, modified or restated from time to time .
“Lien” means, with respect to any asset, (a) any lien, charge, claim, mortgage, security interest, pledge or assignment of revenues of any kind in respect of such asset or (b) the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset .
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“Maximum Annual Debt Service” has the meaning set forth in the Water Bonds Indenture; provided references therein to Bonds shall also include Subordinated Water Bonds and Senior State Loans.
“Maximum Rate” means the lesser of (a) the maximum non-usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum; provided, however, that if the City or the Commission increases the maximum rate allowable, which currently set forth in clause (b) of this “Maximum Rate” definition, at any time during the term hereof, then such increased rate shall be the Maximum Rate. “Moody’s” means Moody’s Investors Service, Inc., and its successors and assigns . “Net Revenues” has the meaning set forth in the Water Bonds Indenture . “No-Issuance Notice” has the meaning set forth in the Letter of Credit . “Obligations” means the Reimbursement Obligations (which includes amounts owing to the Bank evidenced by the Bank Note) and all other obligations of the Commission to the Bank arising under or in relation to this Agreement (including the Fee Agreement) . “Offering Memorandum ” means any offering memorandum or similar disclosure documents relating to the Series A-4/A-4-T Commercial Paper Notes and the Commission as may be prepared by or on behalf of the Commission or the Dealers from time to time in connection with the offering and sale of Series A -4/A-4-T Commercial Paper Notes . “Official Body” means the government of the United Stat es of America or of any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, reg ulatory or administrative powers or functions of or pertaining to government (including any supra -national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Operation and Maintenance Costs of the Enterprise ” has the meaning set forth in the Water Bonds Indenture.
“Ordinance No. 31.1-08” has the meaning set forth in the recitals to this Agreement. “Original Stated Amount” has the meaning set forth in Section 2.1 hereof. “Other Debt Documents” has the meaning set forth in Section 5.1(c)(i) hereof. “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any -11-
other Basic Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Basic Document .
“Parity Bank Facility” means the credit or liquidity facilities supporting one or more series of Parity Notes.
“Parity Bank Notes ” means the revolving notes and/or term notes issued under Parity Credit Agreements entered into with respect to Parity Bank Facilities . “Parity Credit Agreements” means the credit agreements entered into with respect to Parity Bank Facilities.
“Parity Debt” means any Debt issued or incurred by the Commission and (i) payable on a parity basis from the Revenue Fund with the payment of principal of and interest on the Series A- 4/A-4-T Commercial Paper Notes or the Obligations and includes, without limitation, the Bank Note, the Commercial Paper Notes, the Parity Notes and the Parity Bank Notes and/or (ii) secured on a parity with the lien on Available Water Enterprise Revenues securing the payment of principal of and interest on the Series A-4/A-4-T Commercial Paper Notes or the Obligations and includes, without limitation, the Bank Note, the Commercial Paper Notes, the Parity Notes and the Parity Bank Notes.
“Parity Notes” means commercial paper notes or oth er short-term indebtedness payable from or secured by Available Water Enterprise Revenues. As of the Closing Date, the only Parity Notes outstanding are [(i)] the Commercial Paper Notes, consisting solely of (a) the Subseries A- 1/Subseries A-1-T Commercial Paper Notes, (b) the Subseries A-2/Subseries A-2-T Commercial Paper Notes, (c) the Subseries A -3/Subseries A -3-T Commercial Paper Notes, and (d) the Subseries A-4/Subseries A-4-T Commercial Paper Notes [, and (ii) the Revolving Obligations, consisting of the (i) Series R -1/R-1-T and (ii) Series R-2/R-2-T]. “Participant” has the meaning set forth in Section 7.3(b) hereof. “Participation” has the meaning set forth in Section 7.3(b) hereof. “Payment Account ” means the payment account for the Bank set forth in the Fee Agreement.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Official Body or other entity. “Pledged Revenues ” means Available Water Enterprise Revenues and the Funds and Accounts.
“Prime Rate” means the rate publicly announced by the Bank from time to time as its prime rate. The Prime Rate is determined from time to time by the Bank as a means of pricing some loans to its borrowers. The Prime Rate is not tied to any external rate of interest or index -12-
and does not necessarily reflect the lowest rate of interest actually charged by the Bank to any particular class or category of customers.
“Project” has the meaning set forth in the Water Bonds Indenture . “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. “Proposed Amendments” means the proposed amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture.
“Proposition E” means the measure approved by the voters of the City on November 5, 2002, which among other things, authorized the Commission to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board, for the purpose of reconstructing, replacing, expanding, repairing or improving Water facilities under the jurisdiction of the Commission . “Quarterly Date ” means the first Business Day of each March, June, September or November.
“Rating Agency ” and “Rating Agencies ” means, individually or collectively, as applicable, Moody’s and S&P.
“Reimbursement Obligations ” means any and all obligations of the Commission to reimburse the Bank for Drawings under the Letter of Credit and all obligations to repay the Bank for any Advance or Term Loan, including in each instance all interest accrued thereon, which obligations are evidenced and se cured by the Bank Note. “Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, by, or enters into a settlement with an Official Body in connection with any Anti -Corruption Law, Anti -Money Laundering Law or International Trade Law, or any predicate crime to any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a violation of any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (b) any Covered Entity engages in a transaction that has caused or would cause any Person hereunder to be in violation of any International Trade Law or Anti -Corruption Law, including a Covered Entity’s use of any proceeds of any Advance hereunder or the Letter of Credit to directly or indirectly fund any activities or business of, with, or for the benefit of any Person that is a Sanctioned Person, or to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction; (c) any pledged collateral qualifies as Blocked Property; or (d) any Covered Entity otherwise violates, or reasonably believes that it will violate, any of the International Trade Law - or Anti-Corruption Law-specific representations and covenants herein. “Resolution No. 08-0202” has the meaning set forth in the recitals to this Agreement. -13-
“Resolution No. 300-03” has the meaning set forth in the recitals to this Agreement. “Revenue Fund” has the meaning set forth in the Water Bonds Indenture. “Revenues” has the meaning set forth in the Water Bonds Indenture. “Risk-Based Capital Guidelines ” means (i) the risk -based capital guidelines in effect in the United States, including transition rules, and (i i) the corresponding capital regulations promulgated by regulatory authorities outside the United States including transition rules, and any amendments to such regulations .
“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, and its successors and assigns .
“Sanctioned Person” means any Person that is (a) located in, organized under the laws of, or ordinarily resident in a Sanctioned Jurisdiction; (b) identified on any sanctions -related list maintained by any Compliance Authority; or (c) owned 50% or more, in the aggregate, directly or indirectly by, controlled by, or acting for, on behalf of, or at the direction of, one or more Persons described in clauses (a) or (b) above.
“Sanctioned Jurisdiction” means, at any time, a country, area, territory, or jurisdiction that is the subject or target of comprehensive U.S. sanctions. “Sanctions” means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’ s Treasury or other relevant sanctions authority. “Semi-Annual Date” means the first Quarterly Date that is at least 180 days following the date of the related Advance and the first Business Day of each sixth (6th) month thereafter . “Senior Debt” means any Debt issued or incurred by the Commission and secured by or payable from Water Enterprise Revenues and/or the Revenue Fund on a basis senior or superior to the lien in favor of the Commercial Paper Notes, the other Parity Notes, the Bank Note and the Parity Bank Notes and includes, without limitation, the Senior Water Bonds , Senior State Loans and any Subordinated Water Bonds .
“Senior State Loans” means each loan agreement or installment sale agreement entered into between the Commission and the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof) , in each case, to finance additions, betterments, extensions, repairs, renewals or replacements to the Water Enterprise, and which, by their terms, are secured by or payable from Revenues and/or the Revenue Fund on a senior basis to the obligations hereunder, under the Fee Agreement, the Bank Note, or Parity Notes.
“Senior Water Bonds” has the meaning ascribed to the term “Bonds” in the Water Bonds Indenture, and includes bonds, notes or other evidences of indebtedness payable from Water -14-
Enterprise Revenues on a parity with the outstanding Senior Water Bonds (including, the Senior State Loans).
“Series A-1/A-1-T Commercial Paper Notes” means the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax Exempt SubseriesA-1 and Taxable Subseries A-1-T.
“Series A-2/A-2-T Commercial Paper Notes” means the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax Exempt SubseriesA-2 and Taxable Subseries A-2-T
“Series A-3/A-3-T Commercial Paper Notes” means the Public Ut ilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax Exempt SubseriesA-3 and Taxable Subseries A-3-T
“Series A-1/A-1-T Revolving Obligations” means the Public Utilities Commission of the City a nd County of San Francisco Revolving Obligations (Water Series, Proposition E) Tax Exempt Subseries A-1 and Taxable Subseries A-1-T.
“Series A-2/A-2-T Revolving Obligations” means the Public Utilities Commission of the City and County of San Francisco Revolving Obligations (Water Series, Proposition E) Tax Exempt Subseries A-2 and Taxable Subseries A-2-T.
“Series A-4 Commercial Paper Notes” means the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-4.
“Series A-4/A-4-T Commercial Paper Notes” has the meaning set forth in the recitals to this Agreement.
“State” means the State of California,
“Stated Amount” has the meaning set forth in the Letter of Cr edit. “Stated Expiration Date ” has the meaning set forth in the Letter of Credit . “Subordinated Water Bonds” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Subordinated Water Bonds Indenture” has the meaning set forth in the Issuing and Paying Agent Agreement.
“Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, -15-
interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross -currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. , any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement ”), including any such obligations or liabilities under any Master Agreement . “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto. “Term Loan” has the meaning set forth in Section 2.4(e) hereof. “Term Loan Conversion Date” has the meaning set forth in Section 2.4(b) hereof. “Term Loan Maturity Date ” means, with respect to any Term Loan, the earliest to occur of (i) the third (3rd) anniversary of the date the related Advance was made, (i i) the date on which an Alternate Facility is substituted for the Letter of Credit, (iii) the date on which the Stated Amount is permanently reduced to zero or the Letter of Credit is otherwise terminated in accordance with its terms (other than as a result of the Letter of Credit expiring on the Stated Expiration Date), including as a result of the occurrence of an Event of Defaul t, and (iv) the date on which the Commission issues Series A -4/A-4-T Commercial Paper Notes or bonds, the proceeds of which could be used to repay such Term Loan. “Termination Date” has the meaning set forth in the Letter of Credit . “Unpaid Drawing” has the meaning set forth in Section 2.3 hereof. “Water Bonds Indenture ” means that certain Amended and Restated Indenture, dated as of August 1, 2002, by and between the Commission and U .S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), providing for the issuance from time to time of Senior Water Bonds, as amended by supplemental indentures through and including the Forty-Second Supplemental Indenture, dated as of October 1, 2020, by and between the Commission and U.S. Bank Trust Company, National Association and as the same may be subsequently supplemented, amended and modified from time to time . “Water Enterprise” inclusively, has the meaning set forth in the Issuing and Paying Agent Agreement and the Water Bonds Indenture.
“Water Enterprise Debt ” means any Debt issued or incurred by the Commission and secured by or payable from Water Enterprise Revenues and/or the Revenue Fund, incl uding any obligations of the Commission under any related reimbursement agreements or liquidity -16-
agreements or bank notes secured by or payable from Water Enterprise Revenues and/or the Revenue Fund.
“Water Enterprise Revenues ” has the meaning ascribed to t he term “Revenues” in the Water Bonds Indenture.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Any capitalized terms used herein which are not specifically defined herein shall have the same meanings herein as in the Issuing and Paying Agent Agreement .

Section 1.2. Interpretations . The table of contents and article and section headings of this Agreement are included herein for convenie nce of reference purposes only and shall not constitute a part of this Agreement or affect its interpretation in any respect. All references to time herein shall refer to local time in New York, New York unless otherwise provided herein.

Section 1.03. Accounting Terms . Unless otherwise inconsistent with the terms of this Agreement, all accounting terms shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP .

Section 1.04. Letter of Credit Amounts. Unless otherwise specified herein, the amount of the Letter of Credit at any time shall be deemed to be the maximum amount available to be drawn under the Letter of Credit, whether or not such maximum stated amount is in effect at such time.

Without limiting the foregoing, the determination of such maximum amount shall assume compliance with all conditions for drawing and no reduction for (a) any amount drawn by any drawing referred to in the Letter of Credit, the amount of which, in whole or in part, is subject to reinstatement (unless such amount is not reinstated under the Letter of Credit), or (b) any amount not available to be drawn because Series A -4/A-4-T Commercial Paper Notes are held by or for the account of the Commission.

ARTICLE TWO

LETTER OF CREDIT
Section 2.1. Issuance of Letter of Credit . Upon the terms, subject to the conditions and relying upon the representations and warranties set forth in this Agreement or incorporated herein by reference, the Bank agrees to issue the Letter of Credit substantially in the form of Appendix I hereto. The Letter of Credit shall be in the original stated amount of $163,500,000 (the “Original Stated Amount”), which is the sum of (i) the total aggregate principal amount of the Series A-4/A- 4-T Commercial Paper Notes authorized to be issued under the Issuing and Paying Agent Agreement, plus (ii) interest thereon at the rate of twelve percent (12%) per annum for a period of two hundred seventy (270) days calculated on the basis of a 360 day year .

Section 2.2. Letter of Credit Drawings. The Issuing and Paying Agent is authorized to make Drawings under the Letter of Credit in accordance with its terms . The Commission hereby directs the Bank to make payments under the Letter of Credit in the manner therein provided. The -17-
Commission hereby irrevocably approves reductions and reinstatements of the Stated Amount as provided therein.

Section 2.3. Reimbursement. Subject to the provisions of Section 2.4 hereof, the Commission agrees to pay, or to cause to be paid, to the Bank (i) on each date on which the Bank shall honor any demand for payment under the Letter of Credit (each such payment by the Bank being herein referred to as a “Drawing”) a sum equal to the amount so paid under the Letter of Credit (any amount so paid until reimbursed being herein referred to as an “Unpaid Drawing”), plus (ii) interest on the amount of each such Unpaid Drawing from and including the date such Drawing is paid until the Bank is reimbursed in full for such Drawing equal to the Default Rate .

Subject to the provisions of Section 2.4 hereof respecting Advances (each of which Advances when made shall constitute reimbursement of a Drawing in an amount equal to the amount of such Advance), the Commission shall be obligated, without notice of a Drawing or demand for reimbursement (which notice is hereby waived by the Commission), to reimburse the Bank for all Drawings on the same day as made. For avoidance of doubt, the amount of any Drawing relating to accrued interest on the related Series A-4/A-4-T Commercial Paper Notes shall be reimbursed by the Commission on the date on which such Drawing honored by the Bank. If a Drawing is reimbursed at or prior to 4:00 p.m. New York City time, on the same day on which it is made, no interest shall be payable on such Drawing.

Section 2.4. Advances; Term Loans.
(a) Making of Advances. The Bank agrees that if ( i) the Bank shall honor any Drawing under the Letter of Credit, (ii) the portion of such Drawing relating to the principal amount of the related Series A-4/A-4-T Commercial Paper Notes shall not be reimbursed in full on the date of such Drawing by payment to the Bank as provided in Section 2.3 hereof, and (ii i) (A) the representations and warranties of the Commission contained in Article Four of this Agreement are true and correct as of the date of such Drawing, and (B) no Default or Event of Default shall have occurred and be continuing on the date of such Drawing, the portion of such Drawing relating to the principal amount of the related Series A-4/A-4-T Commercial Paper Notes (or the portion thereof) which is not so reimbursed by the Commission to the Bank shall automatically constitute an advance made by the Bank to the Commission on the date and in an amount equal to the amount of such Drawing relating to the principal amount of the related Series A-4/A-4-T Commercial Paper Notes (or portion thereof) w hich is not so reimbursed by the Commission to the Bank (individually an “Advance” and, collectively, the “Advances”). For purposes of Section 2.3 hereof, each Advance when made shall constitute reimbursement of the portion of the related Drawing relating to the principal amount of the related Series A-4/A-4-T Commercial Paper Notes in an amount equal to the amount of such Advance; and each Advance when made shall preclude, to the extent of the amount of such Advance, the portion of the related Drawing relating to the principal amount of the related Series A -4/A-4-T Commercial Paper Notes from being or constituting an Unpaid Drawing. Unless the Commission shall have otherwise previously advised the Bank in writing, payment by the Bank of any Drawing under the Letter of Credit shall be deemed to constitute a representation and warranty by the Commission that on the date of such Drawing (i) the representations and warranties of the Commission contained in Article Four hereof are true and correct, (i i) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, arbitrator, governmental or other board, body or official, pending -18-
or, to the best knowledge of the Commission, threatened against or affecting the Commission, questioning the validity of the Charter, the Board Proceedings or the Commission Resolutions or any other Basic Document to which it is a pa rty, or the validity of any Parity Debt, or seeking to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of any of the foregoing, and (ii i) no Default or Event of Default has occurred and is continuing. (b) Payment of P rincipal and Interest on Advances . Except as otherwise required or permitted by Section 2.4(c), 2.4(d) or 2.4(e) of this Agreement, the Commission shall repay, or cause to be repaid, the unpaid amount of each Advance on the earlier to occur of ( i) the ninetieth (90th) day next following the date such Advance was made and (i i) the Stated Expiration Date (with respect to such Advance, the “ Term Loan Conversion Date ”). The Commission shall pay interest on the unpaid amount of each Advance from the date of such Advance until paid in full at the Bank Rate from time to time in effect; provided that from and after the occurrence of an Event of Default, each Advance shall bear interest at the Default Rate. Interest on each Advance shall be payable monthly, in arrears, on the first Business Day of each month (commencing with the first such date to occur after the making of the related Advance) and upon prepayment or maturity of such Advance.
(c) Mandatory Prepayment of Advances and Term Loans. The Commission shall prepay Advances and Term Loans if the aggregate proceeds of the issuance of Series A -4/A-4-T Commercial Paper Notes exceed the aggregate principal amount of Series A-4/A-4-T Commercial Paper Notes maturing on the date of such issuance . On the date of each such prepayment of Advances or Term Loans, as applicable (or portions thereof), the Commission shall pay to the Bank interest accrued and unpaid to the date of such prepayment on the aggregate amount of the Advances and Term Loans (or portions thereof) prepaid. Upon the Bank’s receipt of any payment or prepayment of any Advance or Term Loan, the amount of such Advance and/or Term Loan shall be reduced by the amount of such payment or prepayment. Any prepayment pursuant to this clause (c) or clause (d) below shall be applied first to outstanding Term Loans, in the inverse order of maturity, and then to outstanding Advances in the inverse order of maturity. (d) Optional Prepayment. The Commission may prepay Advances in whole, or in part, in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty or premium on one Business Day’s prior written notice, such prepayment to be applied as set forth in clause (c) above .
(e) Term Loan Option. On a Term Loan Conversion Date, each Advance maturing on such date shall, if the conditions set forth in Section 2.4(f) hereof have been satisfied, be converted to a term loan (a “ Term Loan”).
(f) Conditions Precedent to Term Loans . Principal amounts owed by t he Commission for Advances remaining unpaid on their respective Term Loan Conversion Dates will be converted to Term Loans if and only if:
(i) the representations and warranties of the Commission contained in Article Four of this Agreement are true and correct on and as of the Term Loan Conversion Date, and deemed made as of such date, as though made on and as of such date; -19-
(ii) no event has occurred and is continuing which has or is having a material adverse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note or the any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith;
(iii) no Default or Event of Defaul t has occurred and is continuing or would result from converting the Advance to a Term Loan; and
(iv) no No-Issuance Notice is in effect; no Final Drawing Notice is in effect; and no Acceleration Notice has been delivered to the Commission. (g) Repayment of Term Loans. The Commission agrees to pay to the Bank an amount equal to the unpaid principal amount of each Term Loan made by the Bank together with interest thereon from and including the Term Loan Conversion Date to but excluding the date the Bank is reimbursed therefor at a rate per annum equal to the Bank Rate; provided that from and after the occurrence of an Event of Default, each Term Loan shall bear interest at the Default Rate. Interest on the unpaid balance of each Term Loan shall be paid to the Bank monthly in arrears on the first Business Day of each calendar month during the term of such Term Loan (commencing with the first such date to occur after the Term Loan Conversion Date) and on the Term Loan Maturity Date. Each Term Loan shall be repaid in equal (or as nearly as possible) semi-annual installments (each such installment herein referred to as a “Principal Payment”), such Principal Payments commence on the first Semi-Annual Date that is at least 180 days following the date of the related Advance and on each Semi -Annual Date thereafter, until paid in full; provided that the unpaid amount of each Term Loan shall be paid in full not later than the applicable Term Loan Maturity Date; provided further, that if the Commission elects to prepay a Term Loan in part, each such prepayment shall be applied (i) to the Term Loans in inverse order of the Term Loan Conversion Dates of the Term Loans, and (ii) to the remaining Principal Payments relating to each Term Loan prepaid in inverse order of the date of such Principal Payment . (h) Prepayment of Term Loans. The Commission may prepay any Term Loan in whole, or in part in a minimum amount of $500,000 and in integral multiples of $100,000 in excess thereof, in each case without penalty on one Business Day’s prior written notice, such prepayment to be applied as set forth in clause (g) above.

Section 2.5. Fees. The Commission hereby agrees to pay and perform its obligations provided for in the Fee Agreement, including the payment of all fees and expenses provided for therein in the amounts and on the dates set forth therein. The terms and provisions of the Fee Agreement are incorporated herein by reference. All references to amounts due hereunder or under this Agreement shall be deemed to include all amounts and obligations due under the Fee Agreement. All fees paid under this Agreement and the Fee Agreement will be fully earned when due and nonrefundable when paid.

Section 2.6. The Bank Note. All Reimbursement Obligations shall be evidenced by one promissory note of the Commission, designated “San Francisco Public Utilities Commission Bank Note (Water Series, Tax Exempt Subseries A-4 and Taxable Subseries A-4-T),” in substantially -20-
the form of Exhibit A hereto (the “Bank Note”) to be issued on the Closing Date, payable to the Bank in a principal amount equal to the amount of the Original Stated Amount . All Reimbursement Obligations made by the Bank and all payments and prepayments made on account of principal and interest thereof shall be recorded by the Bank on its books and records relating to the Bank Note. The Commission shall pay principal and interest on the Bank Note on the dates and at the rates provided for in Sections 2.3 and 2.4 hereof with respect to Unpaid Drawings, Advances and Term Loans . The Commission’s obligations to repay each Unpaid Drawing, Advance and Term Loan and to pay interest thereon as provide d herein shall be evidenced and secured by the Bank Note, and the Commission shall redeem the Bank Note on each date on which the Commission is required to make a principal payment on an Unpaid Drawing, Advance and/or Term Loan, as applicable, in an amount equal to such payment due on such date and shall pay interest on the Bank Note on each date on which the Commission is required to make an interest payment on an Unpaid Drawing, Advance and/or Term Loan, as applicable.

Section 2.7. Termination or Replacement of Letter of Credit Permanent Reduction of Stated Amount. (a) Notwithstanding any provisions of the Board Proceedings to the contrary, the Commission agrees not to terminate, replace, or permanently reduce the Stated Amount of the Letter of Credit to zero, nor to direct the Issuing and Paying Agent to take any such action, except upon (i) the surrender (and cancellation) of the Letter of Credit to the Bank, (i i) the payment by the Commission to the Bank of the fees and expenses, if any, in the amount set forth in the Fee Agreement (including any termination fee) and all other Obligations payable hereunder and under the Fee Agreement, including, without limitation, all principal and accrued interest due and owing on any Unpaid Drawing, Advance, Term Loan or any amount due under the Bank Note and (iii) the Commission providing the Bank with thirty (30) days’ prior written notice of its intent to terminate, replace or permanently reduce the Stated Amount of the Letter of Credit to zero . (b) Notwithstanding any provisions of the Board Proceedings to the contrary, the Commission agrees not to permanently reduce the Stated Amount of the Letter of Credit to an amount greater than zero, nor to direct the Issuing and Paying Agent to take any such action, except upon (i) delivery by the Bank to the Issuing and Paying Agent of a Decrease Notice (as defined in the Letter of Credit) which will amend the Letter of Credit to confirm the reduction of the Stated Amount, (ii) the payment by the Commission to the Bank of the fees and expenses, if any, in the amount set forth in the Fee Agreement (including any reduction fee) and (ii i) the Commission, providing the Bank with thirty (30) days’ prior written notice of its intent to permanently reduce the Stated Amount of the Letter of Credit to an amount greater than zero. (c) All payments from the Commission to the Bank referred to in this Section 2.7 shall be made with immediately available funds on or before the date of termination, replacement or permanent reduction.

Section 2.8. Computation of Interest and Fees . Interest and fees payable hereunder and under the Fee Agreement shall be calculated on the basis of a year of 36 0 days and the actual number of days elapsed. Interest shall accrue during each period during which interest is computed from and including the first day thereof to but excluding the last day thereof . -21-
Section 2.9. Payment Due on Non- Business Day to Be Made on Next Business Day . If any sum becomes payable pursuant to this Agreement on a day which is not a Business Day, the date for payment thereof shall be extended, without penalty, to the next succeeding Business Day, and such extended time shall be included in the computation of interest and fees .

Section 2.10. Late Payments. If any Obligation is not paid when due, such Obligation will bear interest until paid in full at a rate per annum equal to the Default Rate, payable on demand.

Upon the occurrence and during the continuance of an Event of Default, the Obligations of the Commission hereunder will bear interest at the Default Rate, which interest will be payable by the Commission to the Bank upon demand.

Section 2.11. Source of Funds. All payments made by the Bank pursuant to the Letter of Credit shall be made from funds of the Bank, and not from the funds of any other Person.

Section 2.12. Extension of Stated Expiration Date . If the Commission on any date which is not more than one hundred twenty (120) days nor less than sixty (60) days prior to the Stated Expiration Date (as the same may be extended from time to time) submits to the Bank a written request for an extension of the Stated Expiration Date for a period as specified in such written request, the Bank will make reasonable efforts to respond to such request within thirty (30) days after receipt of all information necessary, in the Bank’ s reasonable judgment, to permit the Bank to make an informed credit decision. In the event the Bank fails to definitively respond to such request within such period of time, the Bank shall be deemed to have refused to grant the extension requested. The Bank may, in its sole and absolute discretion, decide to accept or reject any such proposed extension and no extension shall become effective unless the Bank shall have consented thereto in writing. The consent of the Bank, if granted, shall be conditioned upon the preparation, execution and delivery of documentation in form and substance satisfactory to the Bank and consistent with this Agreement. If such an extension request is accepted by the Bank in its sole and absolute disc retion, the then current Stated Expiration Date for the Letter of Credit shall be extended to the date agreed to by the Commission and the Bank.

Section 2.13. Taxes.
(a) Payments Free of Taxes . Any and all payment s by or on account of any obligation of the Commission hereunder or under the Bank Note or the Fee Agreement shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Commission shall be required by Applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Bank or any Participant receives an amount equal to the sum it would have received had no such deductions been made, (i i) the Commission shall make such deductions and (ii i) the Commission shall timely pay th e full amount deducted to the relevant Governmental Authority in accordance with Applicable Law . (b) Payment of Other Taxes by the Commission. Without limiting the provisions of paragraph (a) above, the Commission shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law . -22-
(c) Indemnification by the Commission. The Commission shall indemnify the Bank and each Participant, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Bank or any Participant and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate stating the amount of such payment or liability delivered to the Commission by the B ank or any Participant shall be conclusive absent manifest error. In addition, the Commission shall indemnify the Bank and each Participant, within thirty (30) days after demand therefor, for any incremental Taxes that may become payable by the Bank or any Participant as a result of any failure of the Commission to pay any Taxes when due to the appropriate Governmental . Authority or to deliver to the Bank or any Participant pursuant to clause (d), documentation evidencing the payment of Taxes . (d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Commission to a Governmental Authority, the Commission shall deliver to the Bank or such Participant the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Bank or such Participant, as applicable.
(e) Treatment of Certain Refunds. If the Bank or any Participant determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified pursuant to this Section (including additional amounts paid by the Commission pursuant to this Section), it shall pay to the applicable indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Bank or such Participant, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the applicable indemnifying party, upon the request of the Bank, or such Participant, as applicable, agrees to repay the amount paid over pursuant to this Section (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Bank or such Participant in the event the Bank or such Pa rticipant is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the Bank or any Participant be required to pay any amount to an indemnifying party pursuant to this paragraph (e) the payment of which would place the Bank or such Participant in a less favorable net after-Tax position than the Bank or such Participant would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require the Bank or any Participant to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Commission or any other Person.
(f) Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obligations of the Commission contained in this Section shall survive the termination of this Agreement and the Letter of Credit and the payment in full of the Bank Note and the obligations of the Commission thereunder and hereunder . -23-
Section 2.14. Increased Costs; Capital or Liquidity Requirement s. (a) Increased Costs Generally . If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, liquidity ratio, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, the Bank or any Participant or the Bank’ s or any such Participant ’s parent or holding company, as the case may be;
(ii) subject to the Bank or any Participant or the Bank’ s or any such Participant’s parent or holding company, as the case may be, to any Tax of any kind whatsoever with respect to this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit, or change the basis of taxation of payments to the Bank or such Participant or the Bank’s or any such Participant ’s parent or holding company, as the case may be, in respect thereof (except for Indemnified Taxes or Other Taxes covered by and the imposition of, or any change in the rate of any Excluded Tax payable by the Bank or a ny Participant or the Bank’s or any such Participant’s parent or holding company, as the case may be); or
(iii) impose on the Bank or any Participant or the Bank’ s or any such Participant’s parent or holding company, as the case may be, any other condition, cost or expense affecting this Agreement, the Bank Note, the Fee Agreement or the Letter of Credit;
and the result of any of the foregoing shall be to increase the cost to the Bank or such Participant or the Bank’s or any such Participant’s parent or holding company, as the case may be, related to issuing, funding or maintaining the Letter of Credit, or to reduce the amount of any sum received or receivable by the Bank or such Participant or the Bank’ s or any, such Participant ’s parent or holding company, as the case may be, under this Agreement, the Bank Note or the Fee Agreement (whether of principal, interest or any other amount) then, upon written request of the Bank or such Participant as set forth in clause (c) of this Section, the Commission shall promptly pay to the Bank or such Participant, as the case may be, such additional amount or amounts as will compensate the Bank or such Participant or the Bank’ s or any such Participant ’s parent or holding company, as the case may be, for such additional costs incurred or reduction suffered. Notwithstanding the foregoing, the amount that any Participant shall be entitled to receive under this Section 2.14(a) shall in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.14(a) had such Participant ’s funding obligation been a direct obligation of the Bank. (b) Capital or Liquidity Requirements . If the Bank or any Participant determines that any Change in Law affecting the Bank or such Participant or the Bank’ s or such Participant ’s parent or holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on the Bank’ s or such Participant ’s or the Bank’s or such Participant’s parent or holding company, if any, as a consequence of this Agreement, the Bank Note or the Fee Agreement, or for issuing, funding or maintaining the Letter of Credit, to a level below that which the Bank or such Participant or the Bank’s or such Participant’s parent or holding -24-
company could have achieved but for such Change in Law (taking into consideration the Bank’ s or such Participant’s policies and the policies of the Bank’s or such Participant’s parent or holding company with respect to capital adequacy or liquidity), then from time to time upon written request of the Bank or such Participant as set forth in clause (c) of this Section, the Commission shall promptly pay to the Bank or such Participant, as the ca se may be, such additional amount or amounts as will compensate the Bank or such Participant or the Bank’s or such Participant’s parent or holding company for any such reduction suffered. Notwithstanding the foregoing, the amount that any Participant shall be entitled to receive under this Section 2.14(b) shall in no event exceed the amount that the Bank would have been entitled to receive under this Section 2.14(b) had such Participant’s funding obligation been a direct obligation of the Bank. (c) Certificates for Reimbursement. A certificate of the Bank or a Participant setting forth the amount or amounts necessary to compensate the Bank or any such Participant or the Bank’s or any such Participant ’s parent or holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Commission, shall be conclusive absent manifest error. The Commission shall pay the Bank or any such Participant, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof . (d) Delay in Requests . Failure or delay on the part of the Bank or any such Participant to demand compensation pursuant to this Section shall not constitute a waiver of the Bank’s or any such Participant ’s right to demand such compensation; provided that the Commission shall not be required to compensate the Bank or any such Participant pursuant to this Section for any increased costs incurred or r eductions suffered more than one hundred eighty (180) days prior to the date that the Bank or any such Participant, as the case may be, notifies the Commission of the Change in Law giving rise to such increased costs or reductions, and of the Bank’s or any such Participant’s intention to claim compensation therefor (except that ( i) if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180- day period referred to above shall be extended to include the period of retroa ctive effect thereof and (i i) if the Bank or any such Participant had no actual knowledge of the action resulting in such increased costs as of the date six months prior to the date of notice to the Commission, then the six- month period referred to above will not apply). As of the Closing Date, the Bank has no knowledge of any enacted, adopted or issued Change in Law that would result in the imposition of increased costs pursuant to this Section 2.14.
(e) Survival. Without prejudice to the survival of any other agreement of the Commission hereunder, the agreements and obligations of the Commission contained in this Section shall survive the termination of this Agreement and the Letter of Credit and the payment in full of the Bank Note and the obligations of the Commission thereunder and hereunder .

Section 2.15. Margin Regulations. No portion of the proceeds of any Drawings under the Letter of Credit shall be used by the Commission (or the Issuing and Paying Agent or any other Person on behalf of the Commission) for the purpose of “ purchasing” or “carrying” any margin stock or used in any manner which might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T, or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of said Board of Governors or to violate the Securities -25-
Exchange Act of 1934, as amended, in each case as in effect on the date or dates of such Drawings or Advances and such use of proceeds .

Section 2.16. Maximum Rate; Payment of Fee. Anything in Section 2.3, 2.4 or 2.10 hereof to the contrary notwithstanding, the amount of interest payable hereunder for any interest period shall not exceed the Maximum Rate. If (i) for any interest period the applicable interest rate would exceed the Maximum Rate, then (ii) such interest rate shall not exceed but shall be capped at such Maximum Rate and (iii) in any interest period thereafter that the applicable interest rate is less than the Maximum Rate, any Obligation hereunder shall bear interest at the Maximum Rate until the earlier of (x) payment to the Bank of an amount equal to the amount which would have accrued but for the limitation set forth under clause (i) of this paragraph and (y) the Term Loan Maturity Date. Upon the Term Loan Maturity Date or, if no Term Loan is or could be outstanding on the Termination Date, the Termination Date, in consideration for the limitation of the rate of interest otherwise payable hereunder, to the extent permitted by applicable law the Commission shall pay to the Bank a fee in an amount equal to the amount which would have accrued but for the limitation set forth under clause (i) of this paragraph that has not previously been paid to the Bank in accordance with the immediately preceding sentence.

Section 2.17. Security of Obligations . Notwithstanding any other provision of this Agreement or any other Basic Document to the contrary, all obligations to the Bank under this Agreement, including, without limitation, the Bank Note, are limited obligations of the Commission payable solely from the Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts), as provided in the Issuing and Paying Agent Agreement.

Section 2.18. Commercial Paper Operations.
(a) Issuance Generally . The Commission will permit Series A -4/A-4-T Commercial Paper Notes to be issued, and authorize the Issuing and Paying Agent to issue Series A -4/A-4-T Commercial Paper Notes , only in accordance with the terms of the I ssuing and Paying Agent Agreement and this Agreement .
(b) No-Issuance Notices: Final Drawing Notice . Series A-4/A-4-T Commercial Paper Notes may be issued from time to time prior to the Stated Expiration Date in accordance herewith and with the Issuing and Paying Agent Agreement so long as ( i) the Issuing and Paying Agent is not in receipt of a No-Issuance Notice, and not rescinded, by the Bank not to issue Series A-4/A- 4-T Commercial Paper Notes and (ii) the Issuing and Paying Agent is not in receipt of the Final Drawing Notice. The Bank may deliver a No- Issuance Notice at any time a Default or an Event of Default shall have occurred and be continuing. The Bank may deliver the Final Drawing Notice at any time when an Event of Default shall have occurred and be continuing. A No -Issuance Notice or the Final Drawing Notice (for purposes of this Section 2.18(b)) shall be effective when received by the Issuing and Paying Agent; provided, however, that a No-Issuance Notice or the Final Drawing Notice received by the Issuing and Paying Agent after 10:00 a.m. New York City time, on any Business Day shall be effective on the next succeeding Business Day. A No-Issuance Notice or the Final Drawing Notice may be given by facsimile or electronic mail transmission, confirmed in writing within 24 hours, but the failure to so confirm such No-Issuance Notice or the Final Drawing Notice in writing shall not re nder such No-Issuance Notice or the Final Drawing -26-
Notice ineffective. The Bank will furnish a copy of any No-Issuance Notice or the Final Drawing Notice to the Commission and the Dealers promptly following delivery thereof to the Issuing and Paying Agent, but the failure to furnish any such copy shall not render ineffective such No-Issuance Notice or the Final Drawing Notice .

Section 2.19. Method of Payment; Etc. All payments to be made by the Commission under this Agreement, the Bank Note or the Fee Agreement shall be made to the Payment Account not later than 4:00 p.m. New York City time on the date when due and shall be made in lawful money of the United States of America in freely transferab le and immediately available funds . Any payment received after such time shall be deemed to be received on the next succeeding Business Day for purposes of calculating any interest payable in respect thereof .

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RTICLE THREE

CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Effectiveness . As conditions precedent to the obligation of the Bank to issue the Letter of Credit, ea ch of the following conditions precedent shall have been fulfilled to the satisfaction of the Bank and its counsel:
(a) Opinions. The Bank shall have received (i) an opinion of the City Attorney of the City dated the Closing Date and addressed to the Bank (or on which the Bank may rely) to the effect that (A) the Commission is duly organized and validly existing as a commission of the City pursuant to the Charter with full legal power and authority to execute this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other Basic Documents to which it is a party and to issue the Series A- 4/A-4-T Commercial Paper Notes; (B) this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other Basic Documents to which it is a party are valid and binding agreements of the Commission enforceable against the Commission in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium or other laws affecting credit ors’ rights, to general principles of equity and to limitations on remedies against public agencies; (C) no authorization, approval, consent or order of any agency or body having jurisdiction over the Commission is required in connection with the issuance of the Series A-4/A-4-T Commercial Paper Notes which has not been obtained; (D) the issuance of the Series A-4/A-4-T Commercial Paper Notes and the execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other Basic Documents to which it is a party do not conflict with any material law or agreements to which the Commission is a party, or cause a default under any material documents to which the Commission is a party; and (E) no litigation is pending or, to the best knowledge of the Commission, threatened against the Commission threatening its existence or power, its ability to issue the Series A-4/A-4-T Commercial Paper Notes or to enter into and perform its obligations under this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other Basic Documents to which it is a party, or in which a final adverse decision could materially adversely affect the business, operations or financial conditi on -27-
of the Commission, each such opinion (or, in lieu thereof, a reliance letter) to be addressed to the Bank, dated the Closing Date and in form and substance satisfactory to the Bank; and (ii) a reliance letter of Norton Rose Fulbright US LLP addressed to the Bank relating to the opinion of Bond Counsel in the form of Appendix B to the Offering Memorandum, dated the Closing Date and an opinion of Kutak Rock LLP addressed to the Bank with respect to this Agreement, the Fee Agreement, the Bank Note and the I ssuing and Paying Agent Agreement.
(b) Documents. The Bank and its counsel shall have had an opportunity to review the Commission Resolutions, the Board Proceedings, the Offering Memorandum, the Dealer Agreements and the Issuing and Paying Agent Agreement, and such documents shall be in form and substance satisfactory to the Bank. The Bank shall have received executed originals of this Agreement, the Fee Agreement , the Bank Note and the Issuing and Paying Agent Agreement,, and certified copies of the Boa rd Proceedings, the Commission Resolutions, the Dealer Agreements and the Offering Memorandum, including all amendments and supplements, if any, to the foregoing, certified by the Secretary of the Commission or the Board, as applicable, as true, correct and complete copies thereof and being in full force and effect on and as of the Closing Date . (c) Defaults; Representations and Warranties . On and as of the Closing Date hereof, (i) no Default or Event of Default hereunder and no default or event of default under any of the other Basic Documents shall have occurred and be continuing or would occur upon the issuance of the Letter of Credit or the making of any Advance or Term Loan and (ii) the representations of the Commission set forth in Article Four hereof and in each of the other Basic Documents shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of such date. (d) No Litigation. No action, suit, investigation or proceeding shall be pending or, to the knowledge of the Commission, threatened ( i) in connection with the Series A- 4/A-4-T Commercial Paper Notes or the other Basic Documents or any transactions contemplated thereby or hereby or (i i) against or affecting the Commission, the result of which could have a material adverse effect on the business, operations or condition (financial or otherwise) of the Commission or its ability to perform its obligations hereunder or under the Fee Agreement, the Series A-4/A-4-T Commercial Paper Notes or the other Basic Documents to which it is a party .
(e) No Material Adverse Change. Since the date of the 2024 Audited Financial Statements, (i) no material adverse change shall have occurred in the status of the business, operations or condition (financial or otherwise) of the Commission or its ability to perform its obligations hereunder or under the Fee Agreement, the Series A -4/A-4-T Commercial Paper Notes or the other Basic Documents to which it is a party and (ii) no law, regulation, ruling or other action (or interpretation or administration thereof) of the United States, the State of California or any political subdivision or authority therein or thereof is in effect or has occurred, the effect of which would be to prevent the C ommission from fulfilling its obligations hereunder or under the Series A -4/A-4-T Commercial Paper Notes , this Agreement, the Fee Agreement or the other Basic Documents to which it is a party . -28-
(f) Certificate. The Bank shall have received ( i) certified copies of all proceedings of the Commission authorizing the execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other Basic Documents to which it is a party and the transact ions contemplated hereby and thereby, (ii) a certificate or certificates of one or more Authorized Representatives dated the Closing Date certifying to the accuracy of the statements made in Sections 3.1(c), (d) and (e) hereof and further certifying the na me, incumbency and signature of each individual authorized to sign this Agreement, the Fee Agreement, the Bank Note, the Issuing and Paying Agent Agreement and the other documents or certificates to be delivered by the Commission pursuant hereto or thereto and further certifying that the conditions precedent set forth in this Section 3.1 have been satisfied, and (iii) a Certificate of Designated Representatives certifying the name, incumbency and signature of each “Designated Representative” authorized to act on behalf of the General Manager in accordance with the Issuing and Paying Agent Agreement and with respect to actions taken under the Reimbursement Agreement and the Fee Agreement on which the Bank may conclusively rely until a revised certificate is similarly delivered . (g) Payment of Fees. The Bank shall have received all fees and expenses due and payable to the Bank or its legal counsel pursuant to the Fee Agreement shall be paid, or alternative arrangements satisfactory therefor have been made with the Bank. (h) Financial Statements . The Bank shall have received the audited financial statements of the Commission for the Fiscal Year ended June 30, 2024, and internally prepared quarterly budget reports of the Commission for the most recent fiscal quarter end, and a copy of the current quarterly budgeting status report, if not previously provided. (i) Investment, Policy and Guidelines. The Bank shall have received a copy of the current Investment Policy and Guidelines and other permitted investments, certified as of a recent date by an Authorized Representative, which shall be satisfactory to the Bank. (j) Bank Note. The Bank shall have received written confirmation that ( i) a CUSIP number has been obtained from Standard and Poor’s CUSIP Services for the Bank Note and (ii) the Bank Note (and its CUSIP number) has been assigned a long term rating of at least investment grade from at least one Rating Agency . (k) Ratings. The Bank shall have received written confirmation that the Series A-4/A-4-T Commercial Paper Notes have been rated “[___]” by Moody’s and “[___]” by Standard & Poor ’s and that the underlying long- term credit ratings assigned to the Commission’s unenhanced Senior Water Bonds are rated at least “[___]” by Standard & Poor’s and “[___]” by Moody’s.
(l) Other Matters . The Bank shall have received such other statements, certificates, agreements, documents and information with respect to the Commiss ion and matters contemplated by this Agreement as the Bank may request . -29-
In addition, (A) the Bank shall have made a reasonable determination that, as of the Closing Date, no law, regulation, ruling or other action of the United States of America, the State or any other Governmental Authority or any political subdivision or authority therein or thereof shall be in effect or shall have occurred, the effect of which would be to prevent the Commission, the Issuing and Paying Agent, the Dealers or the Bank from fulfilling their respective obligations under this Agreement and the Basic Documents and (B) no material adverse change in the financial condition of the Commission or in the laws, rules, guidelines, or regulations (or their interpretation or administratio n) currently in effect and applicable to the parties hereto, the Commission and the transactions contemplated hereby, as reasonably determined by the Bank, shall have occurred. The execution and delivery of this Agreement by the Bank shall signify its having made such determination .

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RTICLE FOUR

REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to issue the Letter of Credit, the Commission represents and warrants to the Bank as of the Closing Date and as of the Date of each Drawing under the Letter of Credit, as follows:

Section 4.1. Organization, Powers, Etc. The Commission (a) is a commission of the City and County of San Francisco organized and existing under the Charter and (b) has the full legal right, power and authority to ( i) issue and sell the Series A-4/A-4-T Commercial Paper Notes in accordance with the Issuing and Paying Agent Agreement; (i i) to own and operate the Water Enterprise and control its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the issuance of the Series A-4/A-4-T Commercial Paper Notes, and the execution, delivery and performance of its obligations under this Agreement, the Fee Agreement, the Bank Note and the other Basic Documents to which it is a party, (iii) execute, deliver and perform its obligations under the Bank Note, the Fee Agreement, the other Basic Documents to which it is a party and this Agreement, and (i v) to provide for the security of the Series A-4/A-4-T Commercial Paper Notes and the Bank Note pursuant to the Charter, the Commission Resolutions, the Issuing and Paying Agent Agreement, the Water Bonds Indenture and this Agreement; and (c) has complied with all Laws in all matters related to such actions of the Commission as are contemplated by this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to which it is a party.

Section 4.2. Authorization, Absence of Conflicts, Etc. The issuance of the Series A-4/A- 4-T Commercial Paper Notes and the execution, delivery and performance by the Commission of this Agreement, the Bank Note, the Fee Agreement and the other Basic Documents to which it is a party (a) have been duly authorized by all necessary action on the part of the Commission, (b) do not and will not conflict with, or result in a violation of, any Laws, including the Charter, or any order, writ, rule or regulation of any court or governmental agency or instrumentality binding upon or applicable to the Commission which violation would result in a material adverse impact on the Commission and (c) do not and will not conflict with, result in a violation of, or constitute a default under, any resolution, agreement or instrument to which the Commission is a party or by which -30-
the Commission or any of its property is bound which in each case would result in a material adverse impact on the Commission.

Section 4.3. Binding Obligations; Security for Bank Note . (a) This Agreement, the Fee Agreement, the Bank Note and each of the other Basic Documents to which the Commission is a party, when executed by the parties hereto and thereto, will be, valid and binding obligations of the Commission (assuming due authorization and execution by the other parties thereto) enforceable against the Commission in accordance with their respective terms, except to the extent, if any, that the enforceability thereof may be limited by (i) any applicable bankruptcy, insolvency reorganization, moratorium or other similar law of the State or Federal government affecting the enforcement of creditors’ rights heretofore or hereafter enacted, (ii) the fact that enforcement may also be subject to the exercise of judicial discretion in appropriate cases and (iii) the limitations on legal remedies against public agencies of the State, if any . (b) The obligations hereunder, under the Fee Agreement and under the Bank Note are obligations secured by a first Lien on, and payable from, the Pledged Revenues, equally and ratably with, and on a parity with, the Series A-4/A-4-T Commercial Paper Notes and all other Parity Debt (including Parity Notes and any obligations under any credit or liquidity facility secured by and payable from Pledged Revenues supporting such other series of commercial paper notes secured by and payable from Pledged Revenues) .
(c) There is no pledge of or Lien on Water Enterprise Revenues that ranks senior to the obligations hereunder, under the Fee Agreement, the Bank Note, or Parity Notes other than for Senior Debt.
(d) The Bank is the “ Bank” within the meaning of the Issuing and Paying Agent Agreement, the Letter of Credit is the “ Letter of Credit ” within the meaning of the Issuing and Paying Agent Agreement, and this Agreement is the “Reimbursement Agreement ” within the meaning of the Issuing and Paying Agent Agreement .

Section 4.4. Governmental Consent or Approval . No consent, approval, permit, authorization or order of, or registration or filing with, any court or government agency, authority or other instrumentality not already obtained, given or made is required on the part of the Commission for the execution, delivery and performance by the Commission of this Agreement, the Bank Note, the Fee Agreement or any other Basic Document to which it is a pa rty. All consents, approvals, permits, authorizations and orders of, and registrations and filings with, any court or governmental or public agency, authority or other instrumentality required for the issuance, sale, execution, delivery and performance of this Agreement, the Fee Agreement, the Bank Note or any other Basic Document to which it is a party, have been or will be obtained prior to the delivery thereof .

Section 4.5. Absence of Material Litigatio n. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, arbitrator, governmental or other board, body or official, pending or, to the best knowledge of the Commission, threatened agains t or affecting the Commission, questioning the validity of the Charter, the Board Proceedings or the Commission Resolutions, or any proceeding taken or to be taken by the Commission in connection -31-
with the execution, delivery and performance by the Commissi on of this Agreement, the Bank Note, the Fee Agreement, or any other Basic Document to which it is a party, or seeking to prohibit, restrain or enjoin the execution, delivery or performance by the Commission of any of the foregoing, or which, if adversely determined, could reasonably be expected to result in any material adverse change in the financial condition, operations or prospects of the Commission, or wherein an unfavorable decision, ruling or finding would in any way materially adversely affect the transactions contemplated by this Agreement or any of the other Basic Documents .

Section 4.6. Financial Condition. The audited financial statements of the Commission, as at and for the period ended June 30, 2024 (the “2024 Audited Financial Statements”), and all other financial statements of the Commission furnished to the Bank were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and are subject to certification by independent certified public accountants of recognized standing or by independent certified public accountants otherwise acceptable to the Bank . The 2024 Audited Financial Statements were prepared by [ _________]. The audited financial statements of the Commission for fiscal year 2024 will be prepa red by [__________] or similar qualified independent auditing firm. The data on which such financial statements and budget reports are based were true and correct. The 2024 Audited Financial Statements and the budget reports present fairly the financial position of the Commission as of the date they purport to represent and the revenues, expenses and changes in fund balances and in financial position for the periods then ended. Since June 30, 2024, no material adverse change has occurred in the business, operations or condition (financial or otherwise) of the Commission .

Section 4.7. Incorporation of Representations and Warranties . The representations and warranties of the Commission set forth in the Basic Documents are true and accurate in all material respects on the Closing Date, as fully as though made on the Closing Date . The Commission makes, as of the Closing Date, each of such representations and w arranties to, and for the benefit of, the Bank, as if the same were set forth at length herein together with all applicable definitions thereto. No amendment, modification or termination of any such representations, warranties or definitions contained in the Basic Documents shall be effective to amend, modify or terminate the representations, warranties and definitions incorporated herein, by this reference, without the prior written consent of the Bank.

Section 4.8. Accuracy and Completeness of Informati on. All certificates, financial statements, documents and other reports furnished to the Bank by the Commission on or prior to the Closing Date in connection with the transactions c ontemplated hereby were, as of their respective dates and taken in the aggregate, complete and correct in all material respects to the extent necessary to give the Bank true and accurate knowledge of the subject matter thereof and did not contain any untrue statement of a material fact and there are no facts that the Commission has not disclosed in writing to the Bank that, individually or in the aggregate, could materially impair the ability of the Commission to perform its obligations under the Series A -4/A-4-T Commercial Paper Notes, the Bank Note, this Agreement, the Fee Agreement or the other Basic Documents. To the best knowledge of the Commission after due inquiry, t he Offering Memorandum does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that no representation is made with respect to information -32-
included in the Offering Memorandum concerning (i) the Bank, furnished in writing by the Bank expressly for inclusion therein, or (i i) DTC, furnished in writing by DTC expressly for inclusion therein.

Section 4.9. No Default . (a) No Default or Event of Default under this Agreement has occurred and is continuing that is or would, with the passage of time or the giving of notice, or both, constitute a default by the Commission in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Basic Document to which it is a party. (b) No “event of default” shall have occurred and be continuing under any other material mortgage, indenture, contract, agreement or undertaking to which the Commission is a party or which purports to be binding on the Commission or on any of its property.

Section 4.10. No Proposed Legal Changes. There is no amendment or, to the knowledge of the Commission, proposed amendment to the Constitution of the State, any State law or the Charter or any administrative interpretat ion of the Constitution of the State, any State law, or the Charter, or any judicial decision interpreting any of the foregoing, the effect of which could reasonably be expected to have a material adverse effect on the Commission ’s obligations under this Agreement, the Fee Agreement, the Bank Note or any of the other Basic Documents to which the Commission is a party or the ability of the Commission to perform its obligations in connection herewith or therewith . To the best knowledge of the Commission afte r due inquiry, t here is no public vote or referendum pending, proposed or concluded, the results of which could reasonably be expected result in a material adverse effect on the Commission’s obligations under this Agreement, the Fee Agreement, the Bank Note, or any of the other Basic Documents to which it is a party or the ability of the Commission to perform its obligations in connection herewith or therewith or the enforceability or validity of this Agreement or any of the other Basic Documents.

Section 4.11. Compliance with Laws, Etc. The Commission is in compliance with all Laws applicable to it, non-compliance with which might have a material adverse effect on the security for the Series A-4/A-4-T Commercial Paper Notes and the obligations under this Agreement, the Fee Agreement, the Bank Note and the validity and enforceability of this Agreement and the other Basic Documents to which the Commission is a party. In addition, no benefit plan maintained by the Commission for its employees is subject to the provisions of ERISA, and the Commission is in compliance with all Laws in respect of each such benefit plan .

Section 4.12. Environmental Matters . In the ordinary course of its business, the Commission conducts an ongoing review of Environmental Laws on the business, operations and the condition of its property, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for clean-up or closure of properties presently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses) .

On the basis of such review, the Commission does not believe that Environmental Laws are likely -33-
to have a material adverse effect on the ability of the Commission to make any payments in respect of the Series A -4/A-4-T Commercial Paper Notes , the Bank Note or any of its obligations hereunder or under the Fee Agreement .

Section 4.13. Tax S tatus of Interest on Series A-4 Commercial Paper Notes . The Commission represents to the Bank that it has not taken any action, and knows of no action that any other Person has taken, which would cause interest on the Series A-4 Commercial Paper Notes to be includable in the gross income of the recipients thereof for Federal income tax purposes or which would cause interest on the tax- exempt Commercial Paper Notes to be includable in the gross income of the recipients thereof for State of California income tax purposes .

Section 4.14. Issuing and Paying Agent; Dealers . The Commission represents that U.S. Bank Trust Company, National Association has been appointed the Issuing and Paying Agent for the Series A-4/A-4-T Commercial Paper Notes and that as of the date of this Agreement, BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Bank, National Association, initially, have each been duly appointed to serve as Dealers for the Series A -4/A-4-T Commercial Paper Notes under their respective Dealer Agreement and by the Commission.

Section 4.15. Regulation U. The Commission is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System); and no proceeds of the Series A-4/A-4-T Commercial Paper Notes, the Advances or the Term Loans will be used to extend credit to others for the purpose of purchasing or carrying any margin stock.

Section 4.16. Liens. The Issuing and Paying Agent Agreement creates a valid lien on and pledge of the Pledged Revenues, subject only to the provisions of the Issuing and Paying Agent Agreement permitting the application thereof for purpose s and on the terms and conditions set forth therein, to provide security for the payment of the principal of and interest on the Series A - 4/A-4-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note, and no filings, recordings, registrations or other actions are necessary to create or perfect such lien .

Section 4.17. Sovereign Immunity. The Commission is not entitled to immunity from legal proceedings to enforce this Agreement, the Fee Agreement, the Bank Note, the Series A-4/A-4-T Commercial Paper Notes or any other Basic Document to which the Commission is a party (including, without limitation, immunity from service of process or immunity from jurisdiction of any court otherwise having jurisdiction) and is subject to claims and suits for damages in connection with its obligations under this Agreement, the Fee Agreement, the Bank Note, the Series A-4/A-4-T Commercial Paper Notes or any other Basic Document to which the Commission is a party.

Section 4.18. City Business Days. Attached to this Agreement as Exhibit C is a complete and accurate list of the days that are legal holidays of t he City for 2025, as well as any other day the City is authorized by law to be closed for official business during 2025. -34-
Section 4.19. Usury. The terms of this Agreement and the Basic Documents to which the Commission is a party regarding the calculation and payment of interest and fees do not violate any applicable usury laws .

Section 4.20. Insurance. As of the Closing Date, the Commission maintains such insurance, including self -insurance, as is required by Section 5.1(1) hereof.

Section 4.21. ERISA. The Commission does not maintain or contribute to, and has not maintained or contributed to, any Employee Plan that is subj ect to Title IV of ERISA.

Section 4.22. Sanctions Concerns and Anti -Corruption Laws. The Commission represents and warrants that each Covered Entity, and its directors and officers, and any employee, agent, or affiliate acting on behalf of such Covered Entity: (a) is not a Sanctioned Person; (b) does not do any business in or with, or derive any of its operating income from direct or indirect investments in or transactions involving, any Sanctioned Jurisdiction or Sanctioned Person; and (c) is not in violation of, and has not, during the past five (5) years, directly or indirectly, taken any act that could cause any Covered Entity to be in violation of applicable International Trade Laws. No Covered Entity nor any of its directors, officers, employees, or to the knowledge of the Commission, its agents or affiliates acting on behalf of such Covered Entit y has, during the past five (5) years, received any notice or communication from any Person that alleges, or has been involved in an internal investigation involving any allegations relating to, potential violation of any International Trade Laws, or has r eceived a request for information from any Official Body regarding International Trade Law matters. Each Covered Entity has instituted and maintains policies and procedures reasonably designed to ensure compliance with applicable International Trade Laws. The Commission represents and warrants that there is no Blocked Property pledged as collateral.

The Commission represents and warrants that each Covered Entity, and its directors and officers, and any employee, agent, or affiliate acting on behalf of such Covered Entity, is not in violation of, and has not, during the past five (5) years, directly or indirectly, taken any act that could cause any Covered Entity to be in violation of Anti -Corruption Laws, including any act in furtherance of an offer, payment, promise to pay, authorization, or ratification of payment, directly or indirectly, of any money or anything of value (including any gift, sample, rebate, travel, meal and lodging expense, entertainment, service, equipment, debt forgiveness, donation, grant or other thing of value, however characterized) to any Government Official or any Person to secure any improper advantage or to obtain or retain business. No Covered Entity nor any of its directors, officers, employees, or to the knowledge of the Commission, its agents or affiliates acting on behalf of such Covered Entity has, during the past five (5) years, received any notice or communication from any Person that alleges, or has been involved in an internal investigation involving any allegations relating to, potential violation of any Anti-Corruption Laws, or has received a request for information from any Official Body regarding Anti -Corruption Law matters. Each Covered Entity has instituted and maintains policies and procedures reas onably designed to ensure compliance with Anti- Corruption Laws.

Section 4.23. Swap Contracts . The Commission has not entered into any Swap Contract secured by Water Enterprise Revenues (a) wherein any termination payment thereunder is senior -35-
to or on a parity with the payment of the Series A -4/A-4-T Commercial Paper Notes or the Obligations or (b) which requires the Commission to post cash collateral to secure its obligations thereunder.

ARTICLE FIVE

COVENANTS
Section 5.1. Affirmative Covenants . So long as any amounts may be drawn unde r the Letter of Credit or any Obligations remain outstanding under this Agreement, the Commission will perform and observe the covenants set forth below, unless the Bank shall otherwise consent in writing:
(a) Accounting and Reports. The Commission will maintain a standard system of accounting in accordance with GAAP consistently applied and furnish to the Bank:
(i) as soon as practicable and, in any event, within, two hundred forty (240) days after the end of each Fiscal Year of the Commission, a balance sheet of the Commission as at the end of such Fiscal Year and statements of income, changes in fund balances and cash flows for the Fiscal Year then ended, all in reasonable detail prepared in accordance with GAAP consistently applied, and including therein calculations supporting the Commission’ s compliance with Section 5.1(v) hereof; and accompanied by (A) a report and opinion of the Commission’s independent accountants (who shall be of recognized standing or an independent certified public accountant otherwise acceptable to the Bank) which report and opinion shall have been prepared in accordance with generally accepted auditing standards and (B) a compliance certificate, substantially in the form of Exhibit C hereto, signed by an Authorized Representative stating that no Event of Default or Default has occurred, or if such Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;
(ii) as soon as practicable but, in any event, within ten (10) days after the issuance thereof, copies of any prospectus, official statement, offering circular, placement memorandum or similar document, and any supplements thereto and updates and amendments thereof (including any filings made pursuant to Rule 15c2-12 under the Securities Act of 1933, as amended), that the Commission makes available in connection with the offering for sale of any bonds or notes of which it is the issuer and copies of any other financial reports or other written information distributed generally to holders of bonds or notes issued by the Commission;
(iii) within sixty (60) days after the first day of the Fiscal Year, a copy of its Annual Budget for such Fiscal Year and such additional period as may be -36-
covered by such Annual Budget, which Annual Budget shall include all obligations due hereunder, the Fee Agreement and in connection with the Series A -4/A-4-T Commercial Paper Notes and the Bank Note;
(iv) as soon as practicable but, in any event, within ten (10) days after the adoption of any resolution authorizing the issuance of any Parity Debt, notice of the proposed issuance of such Parity Debt and a copy of such resolution; and (v) with reasonable promptness, such other data regarding the financial position or business of the Commission or its property as the Bank may reasonably request from time to time .

As and to the extent that any financial statement, audit report or other filing described in Section 5.1(a) hereof has been filed in accordance with the terms thereof with any nationally recognized municipal securities information repository and with the Municipal Securities Rulemaking Board, the requirements of Section 5.1(a) hereof with respect thereto shall be deemed satisfied .
(b) Access to Records. At any reasonable time and from time to time, during normal business hours and on at least five (5) Business Days’ notice, the Commission will permit the Bank or any of its agents or representatives to visit and inspect any of the properties of the Commission and the other assets of the Commission, to examine the books of account of the Commission (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Commission with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may reasonably request.
(c) Compliance with Documents and Other Debt Documents; Operation and Maintenance of Water Enterprise .
(i) The Commission will perform and comply with each covenant set forth in the Basic Documents, the Water Bonds Indenture and in any other authorizing document that shall be entered into by the Commission and created subsequent to the Closing Date with respect to the Series A-4/A-4-T Commercial Paper Notes , the Water Bonds Indenture or any Parity Debt including, without limitation, each line of credit, letter of credit, bond insurance policy, surety bond or other form of credit or liquidity enhancement the Commission may provide in conjunction with the issuance of any Water Enterprise Debt (the foregoing documents and the Water Bonds Indenture (exclus ive of the Basic Documents) being referred to herein as “Other Debt Documents ”). By the terms of this Agreement, the Bank shall be a third party beneficiary of the covenants set forth in each of the Basic Documents, including each amendment and supplement to the foregoing, and in each Other Debt Document, and each such covenant, together with the related definitions of terms contained therein, is hereby incorporated by reference herein with the same effect as if it were set forth herein in its entirety .

Except as otherwise set forth in paragraph (ii) below and in Section 5.2(a) hereof, -37-
the Commission will not amend, supplement or otherwise modify (or permit any of the foregoing), or request or agree to any consent or waiver under, or effect or permit the c ancellation, acceleration or termination of, or release or permit the release of any collateral held under any of the Basic Documents or any Other Debt Document in any manner without the prior written consent of the Bank, and the Commission will take, or cause to be taken, all such actions as may be reasonably requested by the Bank to strictly enforce the obligations of the other parties to any of the Basic Documents and any Other Debt Documents, as well as each of the covenants set forth therein. The Commission shall give prior written notice to the Bank of any action referred to in this subparagraph (i). (ii) The Commission covenants that it will maintain and preserve the Water Enterprise in good repair and working order at all times from the Water Enterprise Revenues available for such purposes, in conformity with standards customarily followed for municipal water systems of like size and character . The Commission will from time to time make all necessary and proper repairs, renewals, replacements and substitutions to the properties of the Water Enterprise, so that at all times business carried on in connection with the Water Enterprise shall and can be properly and advantageously conducted in an efficient manner and at reasonable cost, and will operate the Water Enterprise in an efficient and economical manner and shall not commit or allow any waste with respect to the Water Enterprise.
(d) Defaults. The Commission will notify the Bank of any Default or Event of Default of which the Commission has knowledge, as soon as possible and, in any event, within three (3) Business Days of acquiring knowledge thereof, setting forth the details of such Default or Event of Default and the action which the Commission has taken and proposes to take with respect thereto .
(e) Compliance with Laws . The Commission will comply in all material respects with all Laws binding upon or applicable to the Commission (including Environmental Laws) and material to this Agreement, the Fee Agreement, the Bank Not e or any other Basic Documents .
(f) Series A -4/A-4-T Commercial Paper Notes . No Series A -4/A-4-T Commercial Paper Note issued pursuant to the Resolution or the Issuing and Paying Agent Agreement shall have a maturity of greater than two hundred seventy (270) days. (g) Use of Proceeds of the Series A -4/A-4-T Commercial Paper Notes . The Commission will use the proceeds derived from the sale of the Series A -4/A-4-T Commercial Paper Notes only for the purposes set forth in the Basic Documents and for such other purpose or purposes as may be approved by the Bank. In addition, the Commission will not use, nor permit the use of, the proceeds of the Series A -4/A-4-T Commercial Paper Notes or any Drawing to be applied in violation of Regulation U issued by the Board of Governors of the Federal Reserve System . -38-
(h) Litigation Notice . The Commission covenants that it will promptly give notice to the Bank of any action, suit or proceeding actually known to it at law or in equity or by or before any court, governmental instrumentality or other agency which, if adversely determined, would materially impair the ability of the Commission to perform its obligations under the Series A -4/A-4-T Commercial Paper Notes , the Bank Note, this Agreement, the Fee Agreement or the other Basic Documents . (i) Investment Policy and Guidelines . The Commission shall promptly notify the Bank in writing, not less than thirty (30) days after the Commission ’s formal consideration thereof, of any change proposed to the I nvestment Policy and Guidelines, Which proposed change would increase the types of investments permitted thereby as of the Closing Date; and which notice shall also confirm compliance with State law . (j) Further Assurances . The Commission shall execute, acknowledge where appropriate, and deliver, and cause to be executed, acknowledged where appropriate, and delivered, from time to time, promptly at the request of the Bank, all such instruments and documents as are usual and customary or advisable to carry out the intent and purpose of this Agreement, the Bank Note and the Basic Documents . (k) Notices. The Commission will promptly furnish, or cause to be furnished, to the Bank ( i) notice of the occurrence of any “event of default ” under the Issuing and Paying Agent Agreement, any other Basic Document to which it is a party or any other document pursuant to which Water Enterprise Debt is issued, incurred, enhanced or purchased, (ii) notice of the failure by any Dealer or the Issuing and the Paying Agent to perform any of their respective obligations under the applicable Dealer Agreement or the Issuing and Paying Agent Agreement, as applicable, (ii i) notice of the appointment, resignation or proposed removal of any Dealer or the Issuing and Paying Agent, (iv) copies of any communications received from any taxing authority, securities regulatory authority or Rating Agency with respect to the Series A -4/A-4-T Commercial Paper Notes , the transactions contemplated hereby, or any other Water Enterprise Debt which discloses the occurrence of an event or the existence of a condition which could materially impair the ability of the Commission to perform its obligations under the Series A -4/A-4-T Commercial Paper Notes, the Bank Note, this Agreement, the Fee Agreement or the other Basic Documents and which are not restricted or prohibited from being shared under the law or the direction of a court of competent jurisdiction or other Governmental Authority or, with respect to Rating Agency reports, which are not confidential draft Rating Agency reports, (v) notice of any proposed substitution of the Letter of Credit, (vi) notice of any proposed amendment to the Issuing and Paying Agent Agreement or the Commissio n Resolutions or any other Basic Document and copies of all such amendments promptly following the execution thereof and (vi i) notice of any change in any material fact or circumstance represented or warranted in this Agreement or in any of the other Basic Documents which could materially impair the ability of the Commission to perform its obligations under the Series A -4/A-4-T Commercial Paper Notes , the Bank Note, this Agreement, the Fee Agreement or the other Basic Documents . -39-
(l) Maintenance of Insurance .
(i) The Commission shall maintain, or cause to be maintained, at all times, insurance on and with respect to its properties with responsible and reputable insurance companies; provided, however, that the Commission may maintain self-insurance general liability on its properties not covered by the PEPIP policy, for worker’s compensation and vehicle liability and, with the consent of the Bank, such other self -insurance as it deems prudent . Such insurance shall include casualty, liability and workers ’ compensation and be in amounts and with deductibles and exclusions customary and reasonable for governmental entities of similar size and with similar operations as the Commission . (ii) The Commission shall, upon request of the Bank, furnish evidence of such insurance to the Bank. The Commission shall also procure and maintain at all times adequate fidelity insurance or bonds on all officers and employees handling or responsible for any Water Enterpri se Revenues or funds of the Water Enterprise, such insurance or bond to be in an aggregate amount at least equal to the maximum amount of such Water Enterprise Revenues or funds at any one time in the custody of all such officers and employees or in the am ount of one million dollars ($1,000,000), whichever is less . The insurance described above may be provided as part of any comprehensive fidelity and other insurance and not separately for the Water Enterprise.
(m) Alternate Facility .
(i) The Commission shall use commercially reasonable efforts to obtain an Alternate Facility to replace the Letter of Credit (or otherwise refinance the Series A-4/A-4-T Commercial Paper Notes) if (A) the Bank decides not to extend the Stated Expiration Date pursuant to Section 2.12 hereof, (B) an Event of Default has occurred and is continuing, (C) the Commission terminates the Letter of Credit pursuant to Section 2.7 hereof or (D) the Bank declares all amounts due hereunder, under the Fee Agreement and under the Bank Note i mmediately become due and payable.
(ii) The Commission shall not cause an Alternate Facility to become effective with respect to less than all the Series A-4/A-4-T Commercial Paper Notes without the prior written consent of the Bank. The Commission agrees that any termination of this Agreement as a result of the provision of any Alternate Facility will require, as a condition thereto, that the Commission provide funds on the date of such termination, which funds will be sufficient to pay all amounts due to the Bank hereunder and under the Fee Agreement including, without limitation, the amounts due with respect to the Bank Note together, in each case, with accrued but unpaid interest thereon. On the date of such termination, the Commission shall pay to the Bank an amount equal to the outstanding principal amount, together with any accrued by unpaid interest thereon, of any and all other obligations due and owing hereunder and under the Fee Agreement.
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(n) Preservation of Security . The Commission shall take any and all actions necessary or reasonably requested by the Bank to maintain the security pledged in favor of the Bank Note as described in Section 5.1(q) hereof.
(o) City Business Days. During the term of this Agreement, upon learning of any change in the legal holidays of the City or the day or days that the City is authorized by law to be closed for official business, as initially listed on Exhibit C attached hereto, the Commission shall promptly send the Bank written notice of such change(s), in the form of an updated complete list, which shall replace Exhibit C attached hereto. (p) Preservation of Existence, Etc. The Commission will not take any action pursuant to the Charter to accomplish a merger of the Water Enterprise with any other entity or enterprise, unless and until the Commission shall have provided a method for segregating the Water Enterprise Revenues from the revenues of said other entity or enterprise in a manner th at will, or shall otherwise, preserve the lien upon the Available Water Enterprise Revenues for the payment of the Series A -4/A-4-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note described in Section 5.1(q) hereof, and shall have obtained an opinion of counsel from a firm nationally recognized in the practice of tax- exempt financing that such merger will not, in and of itself, ( i) affect the exclusion from gross income of the interest o n the Series A-4 Commercial Paper Notes, and (i i) cause the lien or security interest created by this Agreement to be no longer valid as provided in Section 5.1(q) hereof in the event the Commission does effect such a merger, the Commission shall provide written notice thereof to the Bank and shall deliver a copy of the aforementioned opinion to the Bank.
(q) Pledge of Available Revenues . The Series A-4/A-4-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreem ent and the Bank Note are revenue obligations, and are not secured by the taxing power of the Commission or the City and shall be payable as to both principal and interest from, and shall be secured solely by a pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of the Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts) . The Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts) constitute a trust fund for the security and payment of the interest on and principal of the Series A -4/A-4-T Commercial Paper Notes, the Bank Note and all obligations of the Commission relating to the Series A -4/A-4-T Commercial Paper Notes and Bank Note under the Issuing and Paying Agent Agreement and this Agreement and all Parity Notes secured by Available Water Enterprise Revenues. The Commission hereby pledges and grants a Lien and charge on and a security interest in Pledged Revenues (consisting of Available Water Enterprise Revenues and the Funds and Accounts) for the payment of the Series A -4/A-4-T Commercial Paper Notes and the Bank Note and all obligations of the Commission relating to the Series A -4/A-4-T Commercial Paper Notes and Bank Note under the Issuing and Paying Agent Agreement and hereunder without priority or distinction of one over the other, except as expressly provided under the Issuing and Paying Agent Agreement . The pledge of the Pledged Revenues (consisting of Available Water Enterprise Revenues and -41-
the Funds and Accounts) herein made shall be irrevocable until all of the Series A -4/A-4- T Commercial Paper Notes and the Bank Note and any Parity Notes secured by Available Water Enterprise Revenues have been paid and retired and any related obligations of the Commission under this Agreement have been satisfied. No filing, registering or recording shall be required to perfect the securit y interest in the Available Water Enterprise Revenues. The Commission will not issue Debt secured by or payable from the Water Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Ban k Note other than Senior Debt. (r) Payment of Taxes, Etc. The Commission will pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission on account of the Water Enterprise or any portion thereof and which, if unpaid, might impair the security of the Series A-4/A-4-T Commercial Paper Notes or the obligations of the Commission under this Agreement, the Fee Agreement or the Bank Note, when the same s hall become due, but nothing herein contained shall require the Commission to pay any such tax, assessment or charge so long as it shall in good faith contest the validity thereof . The Commission will duly observe and comply with all valid material requir ements of any governmental authority relative to the Water Enterprise or any part thereof . (s) Notice of Rating Change . The Commission shall use its best efforts to notify the Bank as soon as practicable of any suspension, reduction or withdrawal in the senior long-term rating of any Water Enterprise Debt .
(t) Issuing and Paying Agent and Dealer.
(i) The Commission shall at all times maintain an Issuing and Paying Agent pursuant to the terms of the Issuing and Paying Agent Agreement . (ii) The Commission shall at all times maintain a Dealer with respect to the Series A-4/A-4-T Commercial Paper Notes that is acceptable to the Bank. The Commission agrees to cause each Dealer to use its best efforts to sell Series A-4/A- 4-T Commercial Paper Notes up to the maximum rate applicable to Series A-4/A- 4-T Commercial Paper Notes in order to repay maturing Series A -4/A-4-T Commercial Paper Notes. If any Dealer fails to perform its duties under the Dealer Agreement for a period of thirty (30) consecutive calendar days, at the written direction of the Bank, the Commission shall use commercially reasonable efforts to cause the related Dealer (that has failed to perform its duties) to be replaced with a Dealer acceptable to the Bank within thirty (30) calendar days of the receipt of such written direction . Any Dealer Agreement with a successor Dealer shall provide that such dealer may not resign until the earlier of (x) such dealer providing at least sixty (60) days’ prior written notice to the Commission, the Issuing and Paying Agent and the Bank and (y) the date on which a successor dealer has been appointed and accepted its appointment .
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(u) Amounts of Rates and Charges (Water Enterprise Debt). The Commission covenants to establish, maintain and collect rates and charges with respect to the Water Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from t he sale of Commercial Paper Notes or Senior Debt) to pay the Series A-4/A-4-T Commercial Paper Notes and the other Commercial Paper Notes, the Bank Note and the Parity Bank Notes, all other obligations secured by or payable from Water Enterprise Revenues (including, without limitation, all amounts due and owing hereunder and under the Parity Credit Agreements ).
(v) Amounts of Rates and Charges (Senior Debt). (i) Prior to the Amendment Effective Date:
(A) The Commission covenants to at all time s establish, fix, prescribe and collect rates, fees and charges in connection with the water services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable all owances for contingencies and error in the estimates (for avoidance of doubt, calculated on a cash basis and not budgetary basis) to pay the following amounts:
(1) The interest on and principal of the Senior Debt as they become due and payable (but not i ncluding any interest moneys for the payment of which have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source). (2) All other payments required for compliance with the terms of the Water Bonds Indenture and of any Supplemental Indenture (as defined in the Water Bonds Indenture) providing for the issuance of additional Series of Bonds pursuant to Article III of the Water Bonds Indenture and of any Subordinated Water Bonds Indenture . (3) All other payments to meet any other obligations of the Commission which are charges, liens or encumbrances upon, or payable from, the Revenues.
(4) All current Operation and Maintenance Costs of the
Enterprise (but not including such Operation and Maintenance Costs of the Enterprise as are scheduled to be paid by the Commission from moneys other than Revenues, such moneys to be clearly available for such purpose). (B) In addition to the requirements of the foregoing subsection (A), rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise shall be established, fixed, prescribed and collected so as to yield Net Revenues during the then immediately ensuing period of twelve months which (together with any fund ba lances of the Commission or the Enterprise which are available for payment of Debt Service and are not budgeted to be expended during such twelve months but excluding the Bond Reserve Fund -43-
(as defined in the Water Bonds Indenture)) (for avoidance of doubt, calculated on a cash basis and not budgetary basis), are equal to at least 1.25 times Annual Debt Service (but excluding any interest moneys for the payment of which have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source) for said twelve -month period. (C) The Commission may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce such rates, fees and charges below those then in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements of this Section. (ii) On and after the Amendment Effective Date,
(A) To the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates (for avoidance of doubt, calculated on a budgetary basis and not cash basis) to pay the following amounts:
(1) The interest on and principal of Senior Debt as they become due and payable (but not including any interest moneys for the payment of which have been deposited in trust for the payment of interest from the proceeds of any Senior Debt or from any other source).
(2) All other payments required f or compliance with the terms of the Water Bonds Indenture and of any Supplemental Indenture (as defined in the Water Bonds Indenture) providing for the issuance of additional Series of Bonds pursuant to Article III of the Water Bonds Indenture and of any Subordinated Water Bonds Indenture . (3) All other payments to meet any other obligations of the Commission which are charges, liens or encumbrances upon, or payable from, the Revenues.
(4) All current Operation and Maintenance Costs of the
Enterprise (but not including such Operation and Maintenance Costs of the Enterprise as are scheduled to be paid by the Commission from moneys other than Revenues, such moneys to be clearly available for such purpose). (B) In addition to the requirements in subsection ( A) immediately above, to the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise, which are reasonably expected to be at least sufficient to yield during -44-
such Fiscal Year Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund (as defined in the Water Bonds Indenture) equal to 1.25 times Annual Debt Service payable in such Fiscal Year.
(C) The Commission may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but sha ll not reduce such rates, fees and charges below those then in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements of this Section. (D) So long as the Commission has complied with its obligations set forth in clause (A) and clause (B) of this Section 5.1(v)(ii), the failure to yield the amount of Revenues as set forth in clause (A) of this Section 5.1(v)(ii), or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in clause (B) of this Section 5.1(v)(ii) at the end of a Fiscal Year, shall not constitute a default or an Event of Default hereunder so long as the Commission has complied with clause (A) and clause (B) of this Section 5.1(v)(ii) at the commencement of the succeeding Fiscal Year.
(w) Maintenance of Ratings. The Commission shall at all times (i) cause at least one of Moody’s and S&P to maintain at least one short-term rating on the Series A-4/A-4- T Commercial Paper Notes , (i i) cause Moody’s and S&P to maintain a long- term unenhanced debt rating on Senior Debt and (iii) cause at least one of Moody’s and S&P to maintain a long -term rating on the Bank Note .
(x) Annual Budget. The Commission shall include in each Annual Budget of the Commission all amounts reasonably anticipated to be necessary to pay all obligations due to the Bank hereunder, under the Fee Agreement and under the Bank Note . If the amounts so budgeted are not adequate for the payment of the obligations due hereunder, under the Fee Agreement and under the Bank Note, the Commission shall take such action as may be necessary to cause such Annual Budget to be amended, corrected or augmented so as to include therein the amounts required to be paid to the Bank during the course of the Fiscal Year to which such Annual Budget applies .
(y) Sanctions and Anti -Money Laundering. The Commission agrees that it shall: (a) immediately notify the Bank in writing upon the occurrence of a Reportable Compliance Event; (b) immediately provide substitute collateral to the Bank if, at any time, any collateral becomes Blocked Property; and (c) conduct its business in compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws and maintain in effect policies and procedures reasonably designed to ensure compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws by each Covered Entity, and its directors and officers, and any employee, agent or affiliate acting on behalf of such Covered Entity in connection with this Agreement.
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Section 5.2. Negative Covenants. So long as any amounts may be drawn under the Letter of Credit or any Obligations remain outst anding under this Agreement, the Fee Agreement or the Bank Note, the Commission shall not, unless the Bank shall otherwise consent in writing:
(a) Amendments. Subject to Section 5.1(c) hereof, directly or indirectly amend, supplement or terminate any of the Basic Documents or the Water Bonds Indenture, except that (i) the Commission may amend or modify, or permit to be amended or modified, any of the Basic Documents (as and to the extent the Commission’ s participation is required for such purpose) or the Water Bond Indenture in a manner (A) not relating to the duties, obligations or rights of the Bank, under this Agreement and (B) not having a material adverse effect on (x) the ability of the Commission to pay when due the principal of or interest on the Series A -4/A-4-T Commercial Paper Notes and the obligations of the Commission under this Agreement, the Fee Agreement and the Bank Note or (y) the security, rights or remedies of the Bank hereunder or under any Basic Document or the Bank Note, without the prior written consent of the Bank; and (i i) the Commission may amend the Offering Memorandum to update information relating to any entity described therein other than the Bank. The Commission agrees to deliver to the Bank copies of all such amendments, modification, supplements or other changes at least ten (10) Business Days prior to the effective date of any such amendment, modification, supplement or other change. The Bank shall, within five (5) Business Days, inform the Commission in writing if, in its reasonable discretion, such amendment, modification, supplement or other change requires the prior written consent of the Bank in accordance with this Section 5.2(a).

Notwithstanding the foregoing, the Commission, without the Bank’s prior written consent, may perform ministerial duties, make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, as the Commission may deem necessary or desirable, in any case w hich do not adversely affect the security, rights or remedies of the Bank hereunder, under the Fee Agreement or the Bank Note, or any other Basic Document and, solely in connection with the issuance of additional Debt, issue in strict compliance with the terms of the governing documents related thereto .
(b) Merger, Disposition of Assets . Consolidate or merge with or into any person or sell, lease or otherwise transfer all or substantially all of its assets to any person. (c) Preservation of Corporate Existence, Etc. Take any action to terminate its existence as a body politic and corporate and a political subdivision of the State or its rights and privileges as such entity within the State .
(d) Limitations on Series A-4/A-4-T Commercial Paper Note Issuance. Permit the aggregate principal amount of all Series A-4/A-4-T Commercial Paper Notes (including the Bank Note) outstanding at any time to exceed $150,000,000 (except as provided in Section 5.2(f) hereof); or permit the aggregate principal amount of all Series A -4/A-4-T Commercial Paper Notes (including the Bank Note) outstanding at any time to exceed the Stated Amount at such time or permit the Issuing and Paying Agent to issue, or permit the Dealer to market, any Series A -4/A-4-T Commercial Paper Notes with a maturity date earlier than three (3) days from its date of issuance; provided, however, that the -46-
Commission may issue Series A -4/A-4-T Commercial Paper Notes with a maturity date earlier than three (3) days from its date of issuance so long as the Commission has provided the Bank with at least five (5) Business Days’ prior written notice of such issuance and the Bank has not objected to the issuance at least two (2) Business Days in advanc e of such proposed issuance.
(e) Exempt Status. Take any action, omit to take any action or cause or permit another person to take any action or omit to take any action, which, if taken or omitted, would adversely affect the excludability of interest on the Series A-4 Commercial Paper Notes from the gross income of the holders thereof for purposes of Federal income taxation. (f) Issue Debt. (1) Issue any Water Enterprise Debt unless:
(i) no “event of default ” shall have occurred and be continuing under the agreement or instrument pursuant to which any outstanding Water Enterprise Debt was issued or incurred and no event shall have occurred which, but for the passage of time or the giving of notice, would constitute an “event of default” under any such agreement or instrument;
(ii) such Water Enterprise Debt will not exceed at any time any limitation set forth in the Constitution or other laws of the State, the Charter, the Board Proceedings, the Commission Resolutions, any other resolutions adopted by the Commission, or the Issuing and Paying Agent Agreement; (iii) (A) prior to the Amendment Effective Date,
(w) If any portion of the proceeds of such Series of Senior Water Bonds or Subordinated Water Bonds is to be used to finance construction of a Project, the Commission shall provide to the Bank a certificate of the Consulting Engineers setting forth (A) the estimated date of completion for the portion of the Project for which such Series of Senior Water Bond s or Subordinated Water Bonds is being issued and for any other uncompleted portion of the Project, and (B) an estimate of the cost of construction of such portion of the Project and of any other uncompleted portion of the Projec t. (x) The Commission shal l provide to the Bank a Certificate of the Commission setting forth for each of the next three Fiscal Years (and if any portion of the proceeds of such Series of Senior Water Bonds or Subordinated Water Bonds is to be used to finance construction, the thre e Fiscal Years following the Fiscal Year in which the Consulting Engineers estimate such portion of the Project will be completed) estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues.
(y) Prior to the issu ance of any additional Senior Water Bonds or Subordinated Water Bonds, the Commission shall provide to the Bank a -47-
certificate setting forth, for each of the next three Fiscal Years, (A) estimated Net Revenues, as set forth in paragraph (x) above, for each of such three Fiscal Years (and, if any portion of the proceeds of such Senior Debt are to be used to finance construction, the three Fiscal Years following the Fiscal Year in which the Consulting Engineers estimate such portion of the Project will be completed), (B) the Annual Debt Service for each of such Fiscal Years (taking into account the issuance of such additional indebtedness), including Annual Debt Service as estimated in such certificate of the Commission with respect to future Senior Water Bonds or Subordinated Water Bonds, if any, which the Commission estimates will be required to complete payment of the cost of construction of such portion of the Project and any other uncompleted portion of the Project, and (C) demonstrating that the estimated Net Revenues (together with any fund balances of the Commission which are available for the payment of Debt Service but excluding the Bond Reserve Fund) in each of the Fiscal Years set forth in paragraph (x) above is at least equal to 1.25 times the Annual Debt Service for each of such respective Fiscal Years.

Provided, however, that any refunding Senior Water Bonds or Subordinated Water Bonds shall be issued in compliance with the Water Bond Indenture or Subordinated Water Bonds Indenture under which such Senior Water Bonds or Subordinated Water Bonds , as applicable, were issued and shall not be subject to this Section 5.2(f)(1)(iii).
(B) On and after the Amendment Effective Date,
(w) If any portion of the proceeds of such Series of Senior Water Bonds or Subordinated Water Bonds is to be used to finance construction of a Project after the sale of the additional Series of Senior Water Bonds or Subordinated Water Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall provide to the Bank the following documents; these documents shall, with respect to such Series of Senior Water Bonds or Subordinated Water Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof (except that, with respect to Variable Rate Indebtedness (as defined in the Water Bonds Indenture) , the interest rate for the Series of Senior Water Bonds or Subordinated Water Bonds shall be calculated in accordance with the provisions of subsection (iv) of the definition of Maximum Annual Debt Service).
(I) A Certificate of the Commission setting forth for each of the next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues. (II) A Certificate of the Commission demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited -48-
financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Senior Water Bonds or Subordinated Water Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Senior Water Bonds or Subordinated Water Bonds, will not be less than

1.25:1; or (2) the ratio of (A) Net Revenues projected by the Commission for each of the next three Fiscal Years as determined in clause (I) immediately above, and including in such projections amounts projected to be received from any adopted rate increases (but excluding the Bond Reserve Fund (as defined in the Water Bonds Indenture), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Senior Water Bonds or Subordinated Water Bonds , will not be less than 1.25:1 in each of such Fiscal Years.

Provided, however, that any refunding Senior Water Bonds or Subordinated Water Bonds shall be issued in compliance with the Water Bond Indenture or Subordinated Water Bonds Indenture under which such Senior Water Bonds or Subordinated Water Bonds , as applicable, were issued and shall not be subject to this Section 5.2(f)(1)(iii).
(iv) prior to the issuance of any additional Senior State Loans, the Commission shall provide to the Bank a certificate setting forth, for each of the next three Fiscal Years after the delivery of such Senior State Loans (A) the Water Enterprise Revenues, Operation and Maintenance Costs of the Enterprise and Net Revenues (assuming the delivery of the Senior State Loans) and (B) the Annual Debt Service, (assuming the delivery of the Senior State Loans) and demonstrating that the estimated Net Revenues (together with any fund balances of the Commission which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such Fiscal Years is at least 1.25 times the Annual Debt Service in each of such Fiscal Years ;
(v) prior to the issuance of any additional Water Enterprise Debt, the Commission shall provide to the Bank a certificate certifying that either (x) the actual revenues of the Water Enterprise for the most recently completed Fiscal Year and (y) projected revenues for the next three (3) Fiscal Years following the issuance of such additi onal Water Enterprise Debt are or will be sufficient to satisfy the covenant set forth in Section 5.1(u) hereof;
(vi) the issuance of Parity Debt will not result in the creation of a Lien on the Available Water Enterprise Revenues that is senior to the Lien securing the Series A -4/A-4-T Commercial Paper Notes or the obligations under this Agreement, the Fee Agreement and the Bank Note;
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(vii) notwithstanding anything herein to the contrary, if such Water Enterprise Debt consists of Subordinated Water Bonds, the Commission shall not issue any Subordinated Water Bonds without the Bank’s prior written consent thereto; provided, for purposes of clarity, that this clause (vii) shall not apply to Senior State Loans;
(viii) if Such Water Enterprise Debt consists of Commercial Paper Notes or Parity Notes, the aggregate principal amount of such Commercial Paper Notes and Parity Notes and any amounts outstanding under the Bank Note and any Parity Bank Notes outstanding does not exceed $750,000,000 in aggregate principal amount;
(ix) no Default or Event of Default shall have occurred and be continuing hereunder as a result thereof.
(2) The Commission will not issue Debt secured by or payable from the Water Enterprise Revenues on a basis that is senior to the obligations owed to the Bank hereunder, under the Fee Agreement and the Bank Note other than Senior Debt . (g) Use of Bank ’s Name. Permit the use of the Bank’ s name in any official statement or other offering document unless the Bank shall have approved in writing the description of the Bank contained in such document .
(h) Arbitrage Bonds; Tax-Exempt Status. Invest the proceeds of the Series A- 4 Commercial Paper Notes in any way that would violate the Code or cause the Series A- 4 Commercial Paper Notes to be deemed “ arbitrage bonds” or take any action or omit to take any action if such action or omission would adversely affect the exclusion of interest on the Series A-4 Commercial Paper Notes from gross income of the holders thereof for Federal income tax purposes .
(i) Other Facilities . In the event that the Commission shall enter into or otherwise consent to any Bank Agreement which such Bank Agreement provides such Person with different or more restrictive covenants, shorter amort ization periods with respect to term outs, a higher maximum rate with respect to obligations under a Bank Agreement, different or additional events of default and/or greater rights and remedies than are provided to the Bank in this Agreement, the Commission shall provide the Bank with a copy of each such Bank Agreement and such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies shall automatically be deemed to be incorporated into this Agree ment and the Bank shall have the benefits of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies as if specifically set forth herein . The Commission shall promptly enter into an amendment to this Agreement to include different or more restrictive covenants, different or additional events of default and/or greater rights and remedies; provided that the Bank shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the Commission fails to provide such amendment . -50-
(j) Liens. Create or suffer to exist or permit any Lien on the Pledged Revenues other than the Liens created or permi tted by the Issuing and Paying Agent Agreement, or Liens on Available Water Enterprise Revenues that are junior and subordinate to the Lien created by the Issuing and Paying Agent Agreement and this Agreement under terms and conditions satisfactory to the Bank .
(k) Sovereign Immunity. Assert (and hereby irrevocable waives) the defense of any future right of sovereign immunity in a legal proceeding to enforce or collect upon the obligations of the Commission under this Agreement, the Fee Agreement or the Bank Note or the transactions contemplated hereby or thereby.
(l) Maintenance of Available Water Enterprise Revenues. Acquire, construct, operate or maintain, and within the scope of its powers permit any other public or private corporation, political subdivision, district or agency or any person whatsoever to acquire, construct, operate or maintain, within the City or any part thereof, any system or utility competitive with the Water Enterprise . The Commission will have in effect, or cause to have in effect, at all times an ordinance or resolution requiring all customers of the Water Enterprise to pay the fees, rates and charges applicable to the services and facilities furnished by the Water Enterprise . The Commission will not provide any service of the Water Enterprise free of charge to any person, firm or corporation, or to any public agency (including the United States of America, the State, and any public corporation, political subdivision, city, county district or agency or any thereof), except ( i) for free use by the City and its agencies, (i i) to the extent that any such free use is required by the terms of any existing contract or agreement, and (iii) for incidental insignificant free use so long as such free use does not prevent the Commission from satisfying the other covenants of this Agreement, including, without limitation, Section 5.1(r) hereof. (m) Swap Contracts. Without the prior written consent of the Bank, enter into any Swap Contract secured by Water Enterprise Revenues (a) wherein any termination payments thereunder are senior to or on parity with the payment of the Series A-4/A-4-T Commercial Paper Notes or Parity Notes or the Obligations or (b) which requires the Commission to post cash collateral to secure its obligations thereu nder. (n) Use of Proceeds. Use the proceeds of any credit extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, in each case in violation of, or for a purpose which violates, or would be inconsistent with, Regulation T, U or X of the Board of Governors of the Federal Reserve System . The Commission shall not use the proceeds of the Series A -4/A-4-T Commercial Paper Notes or the Bank Note for any purpose other than as provided for in the Commission Resolutions and not in contravention of applicable Law .
(o) Sanctions. The Commission shall not and, for as long as the Bank has any outstanding Obligations , the Commission shall not permit its directors and officers, and -51-
any employee, agent, or affi liate acting on behalf of the Commission in connection with this Agreement, nor any of its Subsidiaries to: (a) become a Sanctioned Person; (b) directly or indirectly, provide, use, or make available the proceeds of any Advance hereunder (i) to fund any activities or business of, with, or for the benefit of any Person that, at the time of such funding or facilitation, is a Sanctioned Person, (ii) to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction, (iii) in any manner that could result in a violation by any Person of Anti-Corruption Law, Anti-Money Laundering, or International Trade Laws or (iv) in violation of any applicable Law, including, without limitation, any applicable Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (c) repay the Advances with Blocked Property or funds derived from any unlawful activity; or (d) permit any collateral to become Blocked Property. The Commission , for as long as the Bank has any outstanding Obligations, shall not directly or indirectly provide, use, or make available the proceeds of any Advance hereunder to any of the Commission’s Subsidiaries that is not party to this Agreement.

ARTICLE SIX

DEFAULTS
Section 6.1. Events of Default and Remedies. If any of the following events shall occur, each such event shall be an “Event of Default”:
(a) the Commission shall fail to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation, or (ii) any Obligation (other than a Reimbursement Obligation) and, in such case, such failure shall continue for five (5) Business Days; (b) any representation or warranty made by or on behalf of the Commission in this Agreement or in any other Basic Document or in any certificate or statement delivered hereunder or thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered;
(c) the Commission shall default in the due performance or observance of any of the covenants set forth in Section 2.15, 5.1(c), 5.1(d), 5.1(f), 5.1(l)(i), 5.1(m)(ii), 5.1(p),

5.1(q), 5.1(t)(i), 5.1(w)(i), 5.1(w)(ii) or 5.2 hereof; (d) the Commission shall default in the due performance or observance of any other term, covenant or agreement contained in this Agreement or any other Basic Document and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission or the City and County of San Francisco, directly or indirectly, shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, -52-
or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered a gainst it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 6.1(f) of this Agreement; (f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Commission or the City and County of San Francisco or any substantial part of its Property, or a proceeding described in Section 6.1(e)(v) shall be instituted against the Commission or the City and County of San Francisco and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt of the Commission by the Commission or any Governmental Authority with appropriate jurisdiction;
(h) any material provision of this Agreement, the Charter, any other Basic Document or any operative document related to Water Enterprise Debt, including without limitation, the Water Bonds Indenture shall at any time for any reason cease to be valid and binding on the Commission for any reason or shall be declared by any court or other Governmental Authority wit h competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceability thereof shall be publicly contested by the Commission or by a Governmental Authority with competent jurisdiction, or the Commission shall deny that i t has any further liability under this Agreement, the Charter, any other Basic Document or any operative document related to Water Enterprise Debt, including without limitation, the Water Bonds Indenture; (i) dissolution or termination of the existence of the Commission; (j) the Commission shall (i) default on the payment of the principal of or interest on any Water Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Water Enterprise Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Water Enterprise Debt, including, without limitation, any Bank Agreement, or contained in any instrument or agreement evidencing, securing or rel ating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) , or result in, any such Water Enterprise -53-
Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Water Enterprise Debt; (k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Water Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Water Enterprise Debt) was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Debt (other than Water Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or re lating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) , or result in, any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Water Enterprise Debt); (l) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 shall be entered or filed against the Commission or against any of its Property and remain unpaid, unvacated, unbonded or unstayed for a period of [thirty (30)] days;
(m) (i) the Commission shall default in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same shall not have been cured within any applicable cure period or (ii) any “event of default” under any Basic Document (as defined respectively therein) shall have occurred; (n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series A-4 Commercial Paper Notes is includable in the gross income of the holder(s) or owner(s) of such Series A- 4 Commercial Paper Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Moody’s or S&P shall have downgraded its long- term unenhanced rating of any Senior Debt of the Commission to below “A3” (or its equivalent), or “A-” (or its equivalent), respectively, or suspended or withdrawn its rating of the same; or (p) the passage of any Law has occurred which could reasonably be exp ected to have a material adverse effect on the Commission’s ability to perform its obligations under this Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of this Agreement or any of the other Basic Documents. -54-
Section 6.2. Remedies. Upon the occurrence of any Event of Default the Bank may exercise any one or more of the following rights and remedies in addition to any other remedies herein or by law provided:
(a) declare all Obligations to be immediately due and payable, whereupon the same shall be immediately due and payable without any further notice of any kind, which notice is hereby waived by the Commission; provided, however, that in the case of an Event of Default described in Section 6.1(e), (1) or (g) hereof, such acceleration shall automatically occur (unless such automatic acceleration is waived by the Bank in writing); or
(b) issue a No -Issuance Notice (the effect of which shall be as pr ovided in Section 2.18 of this Agreement), permanently reduce the Stated Amount of the Letter of Credit to the amount of the then outstanding Series A-4/A-4-T Commercial Paper Notes supported by the Letter of Credit plus a corresponding amount of interest coverage and/or permanently reduce the Stated Amount of the Letter of Credit as the then outstanding Series A-4/A-4-T Commercial Paper Notes are paid and terminate the Letter of Credit when no Series A-4/A-4-T Commercial Paper Notes remain outstanding; or (c) issue the Final Drawing Notice (the effect of which shall be to cause the Termination Date of the Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity.

Upon the occurrence and during the continuance of an Event of Default, all amounts owing to the Bank hereunder shall bear interest at the D efault Rate, payable on demand.

Upon the occurrence of an “event of default” under the Issuing and Paying Agent Agreement, the Bank may, pursuant to the Issuing and Paying Agent Agreement, by notice to the Commission and the Issuing and Paying Agent (such notice, the “Acceleration Notice” ), (i) declare the principal of all outstanding Series A -4/A-4-T Commercial Paper Notes , and the interest accrued thereon, to be due and payable immediately, whereupon the same shall become and shall be immediately due and payable and (ii) instruct the Issuing and Paying Agent to submit a Drawing under the Letter of Credit to pay such immediately due and payable amount.

A

RTICLE SEVEN

MISCELLANEOUS
Section 7.1. Amendments, Waivers, Etc .. No amendment or waiver of any provision of this Agreement, or consent to any departure by the Commission therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank and an Authorized -55-
Representative of the Commission, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 7.2. Notices. All notices and other communications provided for hereunder shall be in writing (including required copies) and sent by receipted hand delivery (including Federal Express or other receipted courier service), telecopy, facsimile tr ansmission, or regular mail, as follows:
(a) if to the Commission:

City and County of San Francisco
Public Utilities Commission
525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Attention: Chief Financial Officer
Telephone: (415) 554-3155
Facsimile: (415) 554- 3161
(b) if to the Bank:

PNC Bank, National Association
[_____________]
(c) if to Issuing and Paying Agent:

U.S. Bank Trust Company, National Association
100 Wall Street, 6th Floor
New York, New York 10005
Attention: Denia Larios
Telephone: (212) 361-4383
Email: [email protected]
(d) if to the Dealers:

As set forth in each Dealer Agreement.
or, as to each Person named above, at such other address as shall be designated by such Person in a written notice to the parties hereto. All such notices and other communications shall, when delivered, telecopied, sent by facsimile transmission or mailed, be effective when deposited with the courier, telecopied, sent by facsimile transmi ssion or mailed respectively, addressed as aforesaid, except that requests for Drawings submitted to the Bank shall not be effective until received by the Bank.

Section 7.3. Survival of Covenants; Successors and Assigns . (a) All covenants, agreements, representations, and warranties made herein and in the certificates delivered pursuant hereto shall survive the making of any Drawing or Advance hereunder and shall continue in f ull -56-
force and effect until all of the Obligations hereunder shall have been paid in full. Whenever in this Agreement any of the parties hereto is referred to, such reference shall, subject to the last sentence of this Section, be deemed to include the suc cessors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Commission which are contained in this Agreement shall inure to the benefit of the successors and assigns of the Bank. The Commission may not transfer its rights or obligations under this Agreement without the prior written consent of the Bank. The Bank may transfer or assign some or all of its rights and obligations under this Agreement, the Fee Agreement, the Bank Note and the Letter of Credit with the prior written consent of the Commission (which consent shall not be withheld unreasonably), provided that (i) with respect to the Letter of Credit only, the Commission has received written notice from each Rating Agency maintaining a rating on the Series A-4/A-4-T Commercial Paper Notes that the transfer shall not cause the lowering, withdrawal or suspension of any ratings then existing on the Series A-4/A-4-T Commercial Paper Notes, and (ii) the Bank shall be responsible for all costs resulting from th e transfer. This Agreement is made solely for the benefit of the Commission and the Bank, and no other Person (including, without limitation, the Issuing and Paying Agent, any Dealer or any holder of Series A-4/A-4-T Commercial Paper Notes) shall have any right, benefit or interest under or because of the existence of this Agreement; provided further that the Commission’s liability to any Participant shall not in any event exceed that liability which the Commission would owe to the Bank but for such partic ipation. (b) Notwithstanding the foregoing, the Bank shall be permitted to grant to one or more financial institutions (each, a “Participant”) a participation or participations in all or any part of the Bank’s rights and benefits and obligations under this Agreement, the Fee Agreement, the Bank Note and the Letter of Credit on a participating basis but not as a party to this Agreement (a “Participation”) without the consent of or notice to the Commission. In the event of any such grant by the Bank of a Pa rticipation to a Participant, the Bank shall remain responsible for the performance of its obligations under the Letter of Credit, and the Commission shall continue to deal solely and directly with the Bank in connection with the Bank’s rights and obligati ons under this Agreement, the Fee Agreement, the Bank Note and under the Letter of Credit. The Commission agrees that each Participant shall, to the extent of its Participation, be entitled to the benefits of this Agreement, the Fee Agreement and the Bank Note as if such Participant were the Bank, provided that no Participant shall have the right to declare, or to take actions in response to, an Event of Default under Section 6.1 hereof.

Section 7.4. Unconditional Obligations . The obligations of the Commission under this Agreement and under the Fee Agreement shall be absolute, unconditional, irrevocable and payable strictly in accordance with the terms of the Issuing and Paying Agent Agreement, this Agreement and the other Basic Documents to which the Commission is a party, under all circumstances whatsoever, including, without limitation, the following:
(a) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Fee Agreement or the Series A-4/A-4-T Commercial Paper Notes or any other Basic Document;
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(b) any amendment or waiver of or any consent to departure from the terms of the Issuing and Paying Agent Agreement or all or any of the other Basic Documents to which the Bank has not consented in writing;
(c) the existence of any claim, counterclaim, set -off, recoupment, defense, or other right which any Person may have at any time against the Bank, the Commission, the Issuing and Paying Agent, any Dealer, or any other Person, whether in connection with this Agreement, the other Basic Documents, or any other transaction related thereto; (d) payment by the Bank of a Drawing or an Advance against presentation of a request which the Bank in good faith determines to be val id, sufficient or genuine and which subsequently is found not to comply with the terms of this Agreement or the Letter of Credit, as applicable; and
(e) any other circumstances or happening whatsoever whether or not similar to any of the foregoing.

Section 7.5. Liability of Bank; Indemnification . (a) To the extent permitted by the laws of the State, the Commission assumes all risks of the acts or omissions of the Issuing and Paying Agent with respect to the use of the Letter of Credit and the use of proceeds thereunder; provided that this assumption with respect to the Bank is not intended to and shall not preclude the Commission from pursuing such rights and remedies as it may have against the Issuing and Paying Agent under any other agreements. Neither the Bank nor any of its respective officers or directors shall be liable or responsible for (i) the use of the Letter of Credit, the Drawings or Advances thereunder, the proceeds of the Series A -4/A-4-T Commercial Paper Notes or the transactions contemplated hereby and by the Basic Documents or for any acts or omissions of the Issuing and Paying Agent or any Dealer, (ii) the validity, sufficiency, or genuineness of any documents determined in good faith by the Bank to be valid, sufficient or genuine, even if such documents shall, in fact, prove to be in any or all respects invalid, fraudulent, forged or insufficient, (iii) payments by the Bank against presentation of requests for Drawings or requests for which the Bank in good faith has determined to be valid, sufficient or genuine and which subsequently are found not to comply with the terms of this Agreement, or (iv) any other circumstances whatsoever in making or failing to make payment he reunder; provided that the Commission shall not be required to indemnify the Bank for any claims, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the gross negligence or willful misconduct of the Bank as determined by a court of competent jurisdiction by final and nonappealable judgment . (b) To the extent permitted by the laws of the State, the Commission hereby indemnifies and holds harmless the Bank from and against any and all claims, damages, losses, liabilities, costs or expenses (including specifically reasonable attorneys’ fees) which the Bank may incur (or which may be claimed against the Bank by any Person whatsoever) by reason of or in connection with (i) the execution and delivery of this Agreement, the Let ter of Credit and the transactions contemplated hereby or thereby and (ii) any untrue statement or alleged untrue statement of any material fact contained in the Offering Memorandum prepared and distributed in connection with the Series A-4/A-4-T Commercial Paper Notes, or the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which -58-
they are or were made, not misleading; provided that the Commission shall not be required t o indemnify the Bank, to the extent, but only to the extent, any such claim, damage, loss, liability, cost or expense is caused by the Bank’s willful misconduct or gross negligence as determined by a court of competent jurisdiction by final and nonappealable judgment . The Bank is hereby expressly authorized and directed to honor any demand for payment which is made under the Letter of Credit without regard to, and without any duty on its part to inquire into the existence of, any disputes or controversies between the Commission, any Dealer the Issuing and Paying Agent or any other person or the respective rights, duties or liabilities of any of them, or whether any facts or occurrences represented in any of the documents presented under the Letter of Credit are true and correct.
(c) To the fullest extent permitted by applicable law, the Commission shall not assert, and hereby waives, any claim against the Bank, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, the Letter of Credit, any other Basic Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby or the use of the proceeds thereof.
(d) The obligations of the Commission under this Section 7.5 shall survive the termination of this Agreement.

Section 7.6. Expenses. (a) The Commission hereby agrees to pay and perform its obligations provided for in the Fee Agreement, including the payment of all expenses provided for therein in the amounts and on the dates set forth therein. The terms and provisions of the Fee Agreement are incorporated herein by reference. All references to amounts due hereunder or under this Agreement shall be deemed to include all amounts and obligations due under the Fee Agreement.
(b) Upon receipt of a written invoice, the Commission shall promptly pay (i) the reasonable out -of-pocket expenses of the Bank incurred in connection with the preparation, execution and delivery and administration of this Agreement, the Letter of Credit, the Fee Agreement and the other Basic Documents (provided that such expenses to be paid in connection with the preparation and execution and delivery will not exceed the amount specified in the Fee Agreement), (iii) the fees and disbursements of counsel to the Bank with respect to advising the Bank as to its rights and responsibilities under this Agreement after the occurrence of an Event of Default and (iii) all costs and expenses, if any, in connection with the administration and enforcement of this Agreement and any other documents which may be delivered in connection herewith, including in each case the fees and disbursements of counsel to the Bank. In addition, and notwithstanding the foregoing, the Commission agrees to pay, after the occurrence of an Event of Default, all costs and expenses (including attorneys' fees and costs of settlement) incurred by the Bank in enforcing any obligations or in collecting any payments due from the Commission hereunder by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “workout” or of any insolvency or bankruptcy proceedings.
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(c) The obligations of the Commission under this Section 7.6 shall survive the termination of this Agreement.

Section 7.7. No Waiver; Conflict . Neither any failure nor any delay on the part of the Bank in exercising any right, power or privilege hereunder, nor any course of dealing with respect to any of the same, shall operate as a waiver thereof, preclude any other or further exercise thereof nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative, and not exclusive of any remedies provided by law. To the extent of any conflict between this Agreement, the Letter of Credit, and any other Basic Documents, this Agreement shall control solely as between the Commission and the Bank.

Section 7.8. Modification, Amendment, Waiver, Etc . No modification, amendment or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed in accordance with Section 7.1 hereof.

Section 7.9. Dealing with the Comm ission, the Issuing and Paying Agent, and/or the Dealer. The Bank and its affiliates may accept deposits from, extend credit to and generally engage in any kind of banking, trust or other business with the Commission, the Issuing and Paying Agent, and/or the Dealer regardless of the capacity of the Bank hereunder.

Section 7.10. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the vali dity or enforceability of such provision in any other jurisdiction, and all other remaining provisions hereof will be construed to render them enforceable to the fullest extent permitted by law. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 7.11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but when taken together shall constitute but one agreement and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by email with a pdf copy or other replicating image attached, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page.

Section 7.12. Table of Contents; Headings . The table of contents and the section and subsection headings used herein have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Agreement.

Section 7.13. Entire Agreement. This Agreement represents the fi nal agreement between the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties hereto as to such subject matter.
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Section 7.14. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial . (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS . (b) EACH PARTY HERETO CONSENTS TO AND SUBMITS TO IN PERSONAM JURISDICTION AND

VENUE IN THE STATE OF CALIFORNIA AND IN THE FEDERAL DISTRICT COURTS WHICH ARE LOCAT ED IN THE NORTHERN DISTRICT OF CALIFORNIA . EACH PARTY ASSERTS THAT IT HAS PURPOSEFULLY

AVAILED ITSELF OF THE BENEFITS OF THE LAWS OF THE STATE OF CALIFORNIA AND WAIVES ANY

OBJECTION TO IN PERSONAM JURISDICTION ON THE GROUNDS OF MINIMUM CONTACTS, WAIVES ANY OBJECTION TO VENUE, AND WAIVES ANY PLEA OF FORUM NON CONVENIENS. THIS CONSENT TO AND SUBMISSION TO JURISDICTION IS WITH REGARD TO ANY ACTION RELATED TO THIS AGREEMENT.

REGARDLESS OF WHETHER THE PARTY’S ACTIONS TOOK PLACE IN THE STATE OF CALIFORNIA OR

ELSEWHERE IN THE UNITED STATES, THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE , AND

DOES NOT PRECLUDE EITHER PARTY FROM OBTAINING JURISDICTION OVER THE OTHER IN ANY COURT OTHERWISE HAVING JURISDICTION .
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAWS , EACH OF THE PARTIES HE R E TO

HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR

ARISING OUT OF THIS AGREEMENT, THE BASIC DOCUMENTS OR ANY OF THE TRANSACTIONS

CONTEMPLATED HEREBY OR THEREBY , INCLUDING CONTRACT CLAIMS , TORT CLAIMS , BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. IF AND TO THE EXTENT THAT

THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL IS UNENFORCEABLE FOR ANY REASON IN

SUCH FORUM
, EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE ADJUDICATION OF ALL

CLAIMS P URSUANT TO JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO HEAR AND DETERMINE ALL ISSUES IN SUCH REFERENCE , WHETHER FACT OR LAW . EACH OF THE PARTIES

HERETO REPRESENTS THAT EA CH HAS REVIEWED THIS WAIVER AND CONSENT AND EACH

KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS AND CONSENTS TO JUDICIAL

REFERENCE FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH MATTERS , IN THE EVENT OF

LITIGATION , A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT OR TO JUDICIAL REFERENCE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 AS PROVIDED HEREIN .
(d) The covenants and waivers made pursuant to this Section 7.14 shall be irrevocable and unmodifiable, whether in writing or orally, and shall be applicable to any subsequent amendments, renewals, supplements or modifications of this Agreement. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

Section 7.15. Governmental Regulations. The Commission shall (a) ensure that no person who owns a controlling interest in or otherwise controls the Commission is or shall be listed on the Specially Designat ed Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ( “OFAC”), the Department of the Treasury or included in any Executive Orders, that prohibits or limits the Bank from making any advance or extens ion of credit to the Commission or from otherwise conducting business with the Commission and (b) ensure that the proceeds of the Series A-4/A-4-T Commercial Paper Notes shall not be used to violate any of the foreign asset control regulations of OFAC or a ny enabling statute or Executive -61-
Order relating thereto. Further, the Commission shall comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act ( “BSA”) laws and regulations, as amended.

Section 7.16. USA PATRIOT Act. The Bank hereby notifies the Commission that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act” ), it is required to obtain, verify a nd record information that identifies the Commission, which information includes the name and address of the Commission and other information that will allow the Bank to identify the Commission in accordance with the Act. The Commission agrees to provide documentary and other evidence of the Commission’s identity as may be requested by the Bank at any time to enable the Bank to verify the Commission’s identity or to comply with any applicable law or regulation, including, without limitation, the Act.

Section 7.17. Electronic Transmissions. The Bank is authorized to accept and process any amendments, transfers, assignments of proceeds, Drawings, consents, waivers and all documents relating to the L etter of Credit which are sent to Bank by electronic transmission, including SWIFT, electronic mail, telex, telecopy, telefax, courier, mail or other computer generated telecommunications and such electronic communication shall have the same legal effect as if written and shall be binding upon and enforceable against the Commission. The Bank may, but shall not be obligated to, require authentication of such electronic transmission or that the Bank receives original documents prior to acting on such electronic transmission. The words “execution,” “signed,” “signature,” and words of like import in any Basic Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act.

Section 7.18. Assignment to Federal Reserve Bank . The Bank may assign and pledge all or any portion of the obligations owing to it hereunder and under the Bank Note to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Offering Memorandum issued by such Federal Reserve Bank, provided that any payment in respect of such assigned obligations made by the Commission to the Bank in accordance with the terms of this Agreement or the Bank Note shall satisfy the Commission’s obligations hereunder and/or under the Bank Note in respect of such assigned obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder.

Section 7.19. City Requirements . The Bank hereby agrees to the City’s requir ements, as provided in Exhibit D attached hereto and incorporated hereby by this reference.

Section 7.20. No Advisory or Fiduciary Responsibility . The transactions described in this Agreement, the Fee Agreement and the Letter of Credit are arm’s length, commercial transactions between the Commission and the Bank in which: (i) the Bank is acting solely as a principal ( i.e., as a lender) and for its own interest; (ii) the Bank is not acting as a municipal advisor or financial advisor to, or providing advice to, the Commission; (iii) the Bank has no fiduciary duty pursuant -62-
to Section 15B of the Securities Exchange Act of 1934, as amended, and the related final rules (the “Municipal Advisor Rules”), to Commission with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether the Bank or any of its affiliates has provided other services or is currently providing other services to the Commission on other matters); (iv) the Bank is relying on the bank exemption in the Municipal Advisor Rules; (v) the only obligations the Bank has to the Commission with respect to this transaction are set forth in this Agreement, the Fee Agreement and the Letter of Credit; and (vi) the Bank is not recommending that the Commission take an action with respect to the transactions described in this Agreement, the Fee Agreement and the Letter of Credit, and before taking any action with respect to these transactions, the Commission should discuss the information contained herein with the Commission’s own legal, accounting, tax, financial and other advisors, as the Commission deems appropriate.

Section 7.21. Redaction. In the event the Commission delivers or causes to be delivered to any Dealer for delivery to the Municipal Securities Rulemaking Board, or directly to the Municipal Securities Rulemaking Board, in either instance pursuant to Rule G -34 (“CUSIP Numbers, New Issue, and Market Information Requirements” ) or any similar rule or regulation, a copy of this Agreement or the Letter of Credit (including without limitation any amendments hereto or thereto), the Commission shall only provide or cause to be provided a copy of this Agreement and the Letter of Credit (including without limitation any amendments hereto or thereto), in the forms provided by the Bank, that redacts such confidential information contained in this Agreement and the Letter of Credit (including without limitation any amendments hereto or thereto) which could be used in a fraudulent manner, such as any VRDO liquidity bank routing or account numbers, staff names and contact information and fees assessed by the Bank, which redaction is consistent with MSRB Notice 2011-17 (February 23, 2011) and the Commission shall not provide or cause to be provided a copy of the Fee Agreement, The Bank shall provide such redacted copies of this Agreement and the Letter of Credit (including without limitation any amendments hereto or thereto) upon request by the Commission. To the extent requested by any Dealer, the Commission shall cause such Dealer to deliver only such redacted copies of this Agreement and the Letter of Credit (including without limitation any amendments hereto or thereto), in the forms provided by the Bank, and shall not permit delivery of a copy of the Fee Agreement, to the Municipal Securities Rulemaking Board pursuant to said Rule G-34 or any similar rule or regulation.

Section 7.22. Notice of New Addresses Under Basic Documents . The Bank hereby gives notice of the addresses of the Bank set forth in the Fee Agreement as notice of a new address for notices to the Bank under the respective notice provisions of each of the Basic Documents.

Section 7.23. US QFC Stay Rules.
(a) Recognition of U.S. Resolution Regimes. In the event that any party that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of this Agreement (and any interest and obligation in or under this Agreement and any property securing this Agreeme nt) from such Covered Entity will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement (and any such interest, obligation and property) were governed by the laws of the United States or a state of the United States. In the event that any party that is a Covered Entity or a BHC Act Affiliate of -63-
such party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights against such party with respect to this Agreement are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States. The requirements of this paragraph (a) apply notwithstanding the provisions of paragraph (b). (b) Limitation on the Exercise of Certain Rights Related to Affiliate Insolvency Proceedings. Notwithstanding anything to the contrary in this Agreement or any related agreement, but subject to the requirements of paragraph (a), no party to this Agreement shall be permitted to exercise any Default Right against a party that is a Covered Entity with respect to this Agreement that is related, directly or indirectly, to a BHC Act A ffiliate of such Covered Entity becoming subject to Insolvency Proceedings, except to the extent the exercise of such Default Right would be permitted under 12 C.F.R. § 252.84, 12 C.F.R. § 47.5, or 12 C.F.R. § 382.4, as applicable. After a BHC Act Affiliat e of a party that is a Covered Entity has become subject to Insolvency Proceedings, any party that seeks to exercise a Default Right against such Covered Entity with respect to this Agreement shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted hereunder. (c) Definitions. As used in this Section 7.23:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Covered Entity” means any of the following:
(a) a “covered entity” as that term is defined in, and interpreted in acco rdance with, 12 C.F.R. § 252.82(b);
(b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “Insolvency Proceeding” means a receivership, insolvency, liquidation, resolution, or similar proceed ing.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder. [Signature pages follow]

[Signature Page to Reimbursement Agreement (Water Series, Proposition E) Tax Exempt Subseries A-4 and Taxable Subseries A-4-T]
IN WITNESS WHEREOF, the Commission and the Bank have duly executed this Agreement as of the date first above written.

PUBLIC UTILITIES COMMISSION OF THE CITY AND

COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:

City Attorney of the City and County of
San Francisco
By: _________________________________
Name: Katherine Thursby Ortega
Title: Deputy City Attorney
Acknowledged:

Director of Public Finance of the City and
County of San Francisco
By: _________________________________
Name: Anna Van Degna
Title: Director of Public Finance of the
City and County of San Francisco

[Signature Page to Reimbursement Agreement (Water Series, Proposition E) Tax Exempt Subseries A-4 and Taxable Subseries A-4-T]

PNC BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

APPENDIX I

FORM OF LETTER OF CREDIT

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY LETTER OF CREDIT
February [__], 2025
$163,500,000
Letter of Credit No. [_____]
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
Ladies and Gentlemen:

We hereby establish, at the request and for the account of the Public Utilities Commission of the City and County of San Francisco (the “Commission” ), in your favor as the Issuing and Paying Agent (the “Issuing and Paying Agent” ) with respect to the Commission’s Commercial Paper Notes (Water Series, Proposition E) Tax Exempt Subseries A-4 and Taxable Subseries A- 4-T (the “Series A-4/A-4-T Commercial Paper Notes”), issued pursuant to that certain Issuing and Paying Agent Agreement, dated as of July 1, 2017, as amended by that certain First Amendment to Issuing and Paying Agent Agre ement, dated as of May 18, 2021, each by and between the Commission and you, as Issuing and Paying Agent (as so amended and as from time to time further supplemented and amended in accordance with the terms thereof and the hereinafter defined Reimbursement Agreement, the “Issuing and Paying Agent Agreement”), pursuant to which up to $150,000,000 in aggregate principal amount of the Series A-4/A-4-T Commercial Paper Notes are being issued, our Irrevocable Transferable Direct -Pay Letter of Credit No. [______] (this “Letter of Credit”) in the maximum available amount of $163,500,000 (the “Stated Amount”; calculated as the sum of the maximum principal amount of the Series A-4/A-4-T Commercial Paper Notes (i.e., $150,000,000 plus interest thereon up to $13,500,000 calculated at the rate of twelve percent (12%) per annum for a period of 270 days and on the basis of a year of 360 days (as more fully described below), which may be drawn on from time to time in respect of the principal of and actual interest accrued o n the Series A-4/A-4-T Commercial Paper Notes , effective on the date hereof and expiring on the Stated Expiration Date (as hereinafter defined) or earlier as hereinafter provided; provided, however, that if such date is not a Business Day, the Stated Expir ation Date will be the next preceding Business Day. The Stated Amount is subject to reductions and reinstatements as provided herein. This Letter of Credit is issued pursuant to the Reimbursement Agreement dated as of February 1, 2025 (as amended, supple mented or otherwise modified from time to time, the “Reimbursement Agreement” ), between the Commission and the Bank.

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Capitalized terms used but not otherwise defined herein have the same meanings herein as in the Reimbursement Agreement.

We hereby irrevocably authorize you to draw on us in an aggregate amount not to exceed the Stated Amount of this Letter of Credit and in accordance with the terms and conditions and subject to the reductions and reinstatements in amount as hereinafter set forth, in one or more Drawings (as hereinafter defined) (subject to the provisions contained in the second following paragraph), payable as set forth herein on any day other than: (i) a Saturday or Sunday; (ii) a day on which banks located in the cities in which the designated office of the Issuing and Paying Agent (initially, New York, New York) or the Bank (initially, New York, New York) is located are required or authorized to close; or (iii) a day on which the New York Stock Exchange is required or authorized to close (a “Business Day” ), by presentation of your written and completed certificate signed by you in the form of (i) Annex A-1 hereto (with respect to the payment at maturity of the principal of and interest at maturity on Series A-4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement), (ii) Annex A-2 hereto (with respect to the payment at maturity of the principal of and interest to maturity on Series A-4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement that otherwise mature on or after the date that you receive notice from us in the form of Annex E hereto (the “Final Drawing Notice” )) or (iii) Annex A-3 hereto ((x) with respect to a payment of the principal of and intere st due upon acceleration of certain of the Series A-4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement (each, an “Acceleration Drawing”) or (y) with respect to the payment of the principal of and interest due upon acceleration of all outstanding Series A -4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement (the “Final Acceleration Drawing” )) (presentation of any such certificate being a “Drawing”), in each case an aggreg ate amount not exceeding the Stated Amount of this Letter of Credit.

Upon our honoring any Drawing, the Stated Amount and the amount available to be drawn hereunder for subsequent Drawings will be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount and the amounts from time to time available to be drawn hereunder (except in the case of the Final Acceleration Drawing or a Drawing resulting from the delivery of the Final Drawing Notice) will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by you to us on the date such Drawing is honored of proceeds of Series A -4/A-4-T Commercial Paper Notes issued on such date or (B) you receive written notice from us to you in the form of Annex I hereto that we have been reimbursed by or on behalf of the Commission for any amount drawn hereunder and (ii) that you have not received from us a No- Issuance Notice in the form attached hereto as Annex U hereto.

Upon our honoring of the Final Acceleration Drawing, the Stated Amount shall be permanently reduced to zero and the Stated Amount shall no longer be reinstated.

The Stated Amount of this Letter of Credit will also be reduced from time to time on each date specified in, and in the amount set forth in, a notice from us to you in the form of Annex F hereto (each, a “Decrease Notice”). As of the applicable date and upon such reduction, the Stated Amount will not be less than the amount specified in the applicable Decrease Notice as the sum of the principal amount of all outstanding Series A-4/A-4-T Commercial Paper Notes plus interest I-3
thereon calculated at the rate of twelve percent (12%) per annum for a period of 270 days and on the basis of a year of 360 days.

All Drawings must be made by presentation of the applicable certificate at the Bank’s office at [___________], Attention: Trade Credit Services Department, Facsimile [____________] (or at such other address or facsimile number as we may specify to you in writing) without further need of documentation, including the original of this Letter of Credit, it being understood that each certificate so submitted is to be the sole operative instrument of such Drawing. You shall use your best efforts to give telephonic notice of a Drawing to the Bank at [___________] on the Business Day of such Drawing and prior to its presentation (but such notice is not a condition to a Drawing hereunder, and you will have no liability for not doing so). If we receive any Drawing, in strict conformity with the terms and conditions of this Letter of Credit, not later than 10:00 a.m.

New York City time on a Business Day prior to the termination hereof, we will honor the same by 1:00 p.m. New York City time on the same day in accordance with your payment instructions. If we receive any Drawing, in strict conformity with the terms and conditions of this Letter of Credit, after 10:00 a.m. New York City time on a Business Day prior to the termination hereof, we will honor the same by 1:00 p.m. New Y ork City time on the next succeeding Business Day in accordance with your payment instructions.

Payment under this Letter of Credit will be made by the Bank by wire transfer of immediately available funds in accordance with the instructions specified by the Issuing and Paying Agent in the related Drawing certificate.

This Letter of Credit will expire at 4:00 p.m. New York City time on the date (the earliest of such dates to occur is referred to herein as the “Termination Date”) which is the earliest of (i) February [__], 2028 (the “Stated Expiration Date”) or such later date as is specified by us in a notice to you in the form of Annex G hereto, (ii) the later of (a) the date on which we receive written notice from you in the form of Annex C hereto that an Alternate Facility has been substituted for this Letter of Credi t in accordance with the Issuing and Paying Agent Agreement and (b) the effective date of such Alternate Facility as specified in such notice (after we honor any properly presented and conforming Drawing on or prior to such date), (iii) the date on which w e receive written notice from you in the form of Annex D hereto that there are no longer any Series A-4/A-4-T Commercial Paper Notes Outstanding within the meaning of the Issuing and Paying Agent Agreement nor does the Commission intend to issue any additi onal Series A -4/A-4-T Commercial Paper Notes under the Issuing and Paying Agent Agreement and that you elect to terminate the Letter of Credit, (iv) the earlier of (a) the 15th calendar day after the date on which you receive the Final Drawing Notice and ( b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored hereunder, and (v) the date on which the Final Acceleration Drawing is honored hereunder. References in the Issuing and Paying Agent Agreement to Termination Date shall mean the Stated Expiration Date.

This Letter of Credit is transferable in whole, but not in part, only to your successor as Issuing and Paying Agent under the Issuing and Paying Agent Agreement and may be successively transferred. Transfer o f the available balance under this Letter of Credit to such transferee must be requested by presenting to us a Transfer Request in the form of Annex B hereto signed by the transferor and the transferee (each, a “Transfer” ) together with the original Letter of Credit.

I-4
Transfers to designated foreign nationals and/or specially designated nationals are not permitted as being contrary to the U.S. Treasury Department or Office of Foreign Assets Control regulations.

Upon the effectiveness of such transfer, the transferee instead of the transferor will be entitled to all the benefits of and rights under this Letter of Credit in the transferor’s place; provided that, in such case, any certificates of the Issuing and Paying Agent to be provided hereunder must be signed by one who states therein that (s)he is a duly authorized officer of the transferee.

This Letter of Credit sets forth in full our undertaking, and such undertaking will not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Series A-4/A-4-T Commercial Paper Notes ), except only ISP98 (as he reinafter defined); and any such reference will not be deemed to incorporate herein by reference any such document, instrument or agreement.

All drawings under this Letter of Credit will be paid with our own funds and will not be paid directly or indirectly from funds or collateral on deposit with or for the account of, or pledged with or for the account of, us by the Commission.

Communications with respect to this Letter of Credit must be addressed to the Bank at [•], [•], [•], [•], by facsimile (at facsim ile number [•] (or such other address(es) as we may specify in writing to you), specifically referring to the number of this Letter of Credit.

Communications with respect to this Letter of Credit will be addressed to you at U.S. Bank Trust Company, National Association, as Issuing and Paying Agent, 100 Wall Street, Suite 1600, New York, New York 10005, Attention; MMI Operations (or such other address(es) as you may specify in writing to us), specifically referring to the number of this Letter of Credit.

Except as expressly stated herein, this Letter of Credit is governed by, and to be construed in accordance with, the rules of the International Standby Practices 1998- 1SP98, International Chamber of Commerce Publication No. 590 (“ISP98”). As to matters not g overned by ISP98, this Letter of Credit is governed by and to be construed in accordance with the law of the State of New York, including, without limitation, Article 5 of the Uniform Commercial Code as in effect in the State of New York on the date hereof .

Very truly yours,
PNC

BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-5
ANNEX A-1
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [_____]

CERTIFICATE FOR DRAWING IN CONNECTION WITH

THE PAYMENT OF PRINCIPAL AND INTEREST
PNC Bank, National Association
The undersigned, a duly authorized officer of U.S. Bank Trust Company, National Association, as Issuing and Paying Agent (the “Issuing and Paying Agent” ), hereby certifies to PNC Bank, National Association (the “Bank”), with reference to irrevocable Transferable Direct -Pay Letter of Credit No. [ _______] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows:

1. The undersigned is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement and is acting as the agent for the holders of the Series A -4/A-4- T Commercial Paper Notes .

2. The Issuing and Paying Agent is making this Drawing under the Letter of Credit with respect to a payment of the principal of and accrued interest on maturing Series A-4/A-4-T Commercial Paper Notes , which payment is due on __________, _____.

3. The amount of this Drawing is equal to $__________ wit h $__________ being drawn in respect of the payment of principal of maturing Series A -4/A-4-T Commercial Paper Notes and $__________ representing _____ days’ interest thereon.

Such amounts were computed in compliance with the terms and conditions of the S eries A-4/A-4-T Commercial Paper Notes and the Issuing and Paying Agent Agreement. The amount of this Drawing does not exceed the Stated Amount of the Letter of Credit. The amount requested for payment hereunder has not been and is not the subject of a prior or contemporaneous request for payment under the Letter of Credit.

4. The Series A -4/A-4-T Commercial Paper Notes were authenticated and delivered by us (or a predecessor Issuing and Paying Agent) pursuant to authority under the Issuing and Paying Agent Agreement.

5. Upon receipt by the Issuing and Paying Agent of the amount demanded hereby, (a) the Issuing and Paying Agent will deposit the same directly into the Debt Service Account maintained by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-4/A-4-T Commercial Paper Notes and the interest amount owing on account of the Series A-4/A-4-T Commercial Paper Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Issuing I-6
and Paying Agent for any other purpose, (c) no portion of said amount will be commingled with other funds held by the Issuing and Paying Agent, except for other funds drawn under the Letter of Credit, and (d) when such Series A -4/A-4-T Commercial Paper Notes have been presented for payment and paid by the Issuing and Paying Agent, the Issuing and Paying Agent will cancel such matured Series A-4-T Commercial Paper Notes.

6. Payment by the Bank pursuant to this Drawing must be made to [__________, ABA Number _____, Account Number __________, Attention ____________________].

IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate on this ____ day of __________, _____.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION , as Issuing and Paying Agent
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-7
ANNEX A-2
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [_______]

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE

PAYMENT OF PRINCIPAL AND INTEREST AFTER FINAL DRAWING NOTICE PNC Bank, National Association
The undersigned, a duly authorized officer of U.S. Bank Trust Company, National Association, as Issuing and P aying Agent (the “Issuing and Paying Agent” ), hereby certifies to PNC Bank, National Association (the “Bank”), with reference to Irrevocable Transferable Direct-Pay Letter of Credit No. [_________] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows:

1. The undersigned is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement and is acting as the agent for the holders of the Series A-4/A-4- T Commercial Paper Notes .

2. The Issuing and Paying Agent has received the Final Drawing Notice.

3. The Issuing and Paying Agent is making this Drawing under the Letter of Credit with respect to payment at maturity of the principal of and interest to maturity on Series A -4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement that otherwise mature on or after the date of the Final Drawing Notice.

4. The amount of this Drawing is e qual to $__________ with $__________ being drawn in respect of the payment of principal of Series A-4/A-4-T Commercial Paper Notes maturing after the date hereof and $__________ representing _____ days’ interest thereon. Such amounts were computed in compliance with the terms and conditions of the Series A-4/A-4-T Commercial Paper Notes and the Issuing and Paying Agent Agreement.

The amount of this Drawing does not exceed the Stated Amount of the Letter of Credit.

The amount requested for payment hereunder has not been and is not the subject of a prior or contemporaneous request for payment under the Letter of Credit.

5. The Series A -4/A-4-T Commercial Paper Notes were authenticated and delivered by us (or a predecessor Issuing and Paying Agent) pursuant to authority under the Issuing and Paying Agent Agreement.

6. Upon receipt by the Issuing and Paying Agent of the amount demanded hereby, (a) the Issuing and Paying Agent will deposit the same directly into the Debt Service Account maintained by the Issuing and Paying Agent pursuant to the Issuing and I-8
Paying Agent Agreement and apply the same directly to the payment when due of the principal amount of Series A-4/A-4-T Commercial Paper Notes and the interest amount owing on account of the Series A-4/A-4-T Commercial Paper Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Issuing and Paying Agent for any other purpose, (c) no portion of said amount will be commingled with other funds held by the Issuing and Paying Agent, except for other funds drawn under the Letter of Credit, and (d) when such Series A-4/A-4-T Commercial Paper Notes have been presented for payment and paid by the Issuing and Paying Agent, the Issuing and Paying Agent will cancel such matured Series A -4/A-4-T Commercial Paper Notes .

7. This Certificate is being presented to the Bank on a date which is no later than the second Business Day prior to the 15th calendar day after receipt by the Issuing and Paying Agent of the Final Drawing Notice.

8. Payment by the Bank pursuant to this Drawing must be made to [__________, ABA Number _____, Account Number __________, Attention ____________________].

IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate on this _____ day of __________, _____.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION , as Issuing and Paying Agent
By: ____________________________________
Name: _____________________________
Title: ______________________________

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ANNEX A-3
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [________]

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE

PAYMENT OF PRINCIPAL AND INTEREST UPON ACCELERATION
PNC Bank, National Association
The undersigned, a duly authorized officer of U.S. Bank Trust Company, National Association, as Issuing and Paying Agent (the “Issuing and Paying Agent” ), hereby certifies to PNC Bank, National Association (the “Bank”), with reference to irrevocable Transf erable Direct-Pay Letter of Credit No. [ ______] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows:

1. The undersigned i s the Issuing and Paying Agent under the Issuing and Paying Agent Agreement and is acting as the agent for the holders of the Series A -4/A-4- T Commercial Paper Notes .

2. The Issuing and Paying Agent is making this Drawing under the Letter of Credit with respect to a payment of the principal of and interest due upon acceleration of certain of the Series A -4/A-4-T Commercial Paper Notes , which payment is due on __________, _____.

3. The amount of this Drawing is equal to $__________ with $__________ being drawn in respect of the payment of principal upon acceleration of such Series A-4/A- 4-T Commercial Paper Notes and $__________ representing _____ days’ interest accrued through the date of acceleration of such Series A-4/A-4-T Commercial Paper Notes. Such amounts were computed in compliance with the terms and conditions of the Series A-4/A- 4-T Commercial Paper Notes and the Issuing and Paying Agent Agreement. The amount of this Drawing does not exceed the Stated Amount of the Letter of Credit. The amount requested for payment hereunder has not been and is not the subject of a prior or contemporaneous request for payment under the Letter of Credit.

4. The Series A -4/A-4-T Commercial Paper Notes were authenticated and delivered by us (or a predecessor Issui ng and Paying Agent) pursuant to authority under the Issuing and Paying Agent Agreement.

5. Upon receipt by the Issuing and Paying Agent of the amount demanded hereby, (a) the Issuing and Paying Agent will deposit the same directly into the Debt Service Account maintained by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement and apply the same directly to the payment of the principal upon acceleration of such Series A-4/A-4-T Commercial Paper Notes and the interest accrued I-10
thereon through the date of acceleration of such Series A-4/A-4-T Commercial Paper Notes pursuant to the Issuing and Paying Agent Agreement, (b) no portion of said amount will be applied by the Issuing and Paying Agent for any other purpose, (c) no portion of said amount will be commingled with other funds held by the Issuing and Paying Agent, except for other funds drawn under the Letter of Credit, and (d) when such Series A -4/A-4-T Commercial Paper Notes have been presented for payment and paid by the Issuing and Paying Agent, the Issuing and Paying Agent will cancel such accelerated Series A-4/A-4- T Commercial Paper Notes .

6. Payment by the Bank pursuant to this Drawing must be made to [__________ ABA Number _____, Account Number __________, Attention ____________________].

7. [Insert in connection with the acceleration of all outstanding Series A-4/A- 4-T Commercial Paper Notes: This Final Acceleration Drawing is presented in connection with the acceleration of all outstanding Series A-4/A-4-T Commercial Paper Notes and is the final Acceleration Drawing available under the Letter of Credit.] IN WITNESS WHEREOF, the Issuing and Paying Agent has executed and delivered this Certificate on this _____ day of __________
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATIO N, as Issuing and Paying Agent
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-11

ANNEX B
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [________]

TRANSFER REQUEST

PNC Bank, National Association
[_________]
Re: PNC Bank, National Association Irrevocable Transferable Direct -Pay Letter of Credit No. [__________] dated February [__], 2025
We, the undersigned “Transferor,” hereby irrevocably transfer all of our rights to draw under the above referenced Letter of Credit ( “Credit”) in their entirety to:

NAME OF TRANSFEREE
______________________________________________________________________________ (Print Name and complete address of the Transferee) “Transfer ee”

ADDRESS OF TRANSFEREE
______________________________________________________________________________ ______________________________________________________________________________

CITY/STATE/COUNTRY ZIP
______________________________________________________________________________ In accordance with ISP98, Rule 6, regarding transfer of drawing rights, all rights of the undersigned Transferor in such Credit arc transferred to the Transferee, which shall have the sole rights as beneficiary thereof, including sole rights relating to any amendments, whether increases or extensions or other amendments and whether now existing or hereafter made. All amendments are to be advised directly to the Transferee without necessity of any consent of or notice to the undersigned Transferor.

The original Credit, including amendments to this date, is attached, and the undersigned Transferor requests that you notify the Transferee of this transfer in such form and manner as you deem appropriate, and of the terms and conditi ons of the Credit as transferred. The undersigned Transferor acknowledges that you incur no obligation hereunder and that the transfer will not be effective until you have expressly consented to effect the transfer by notice to the Transferee and the transfer fee has been paid to you.

I-12
Payment of your transfer fee is for the account of the Commission, which agrees to pay you on demand any expense or cost you may incur in connection with the transfer. Receipt of such fee will not constitute consent by you t o effect the transfer.

Transferor represents and warrants that (i) its execution, delivery, and performance of this Transfer Request (a) are within its powers, (b) have been duly authorized, (c) constitute its legal, valid, binding and enforceable obligati on, (d) do not contravene any charter provision, by law, resolution, contract or other undertaking binding on or affecting it or any of its properties, (e) do not require any notice, filing or other action to, with or by any governmental authority, (f) the enclosed Letter of Credit (and any amendment) is original and complete, (g) there is no outstanding demand, request for payment, reinstatement or transfer under the Letter of Credit affecting the rights to be transferred, (h) the Transferee is the Transferor’s successor as Issuing and Paying Agent under the Issuing and Paying Agent Agreement (as defined in the Credit), (i) the Transferee’s name and address are correct and complete and (j) the Transferee’s use of the Credit as transferred and the transactio ns underlying the Credit and the requested transfer do not violate any applicable United States or other law, rule or regulation.

The Effective Date of this Transfer will be the date hereafter on which you effect the requested transfer by acknowledging thi s Request and giving notice thereof to Transferee.

W

E WAIVE ANY RIGHT TO TRIAL BY JURY THAT WE MAY HAVE IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS TRANSFER.

This transfer is made subject to ISP98 and is subject to and is governed by the law of the State of New York to the extent not inconsistent with ISP98.

Sincerely yours,
_______________________________________
(Print Name of Transferor)
_______________________________________
(Transferor’s Authorized Signature)
_______________________________________
(Print Transferor’s Authorized
Signer’s Name and Title)
_______________________________________
(Transferor’s Authorized Signature)

I-13

SIGNATURE GUARANTEED
Signature(s) with title(s) conform(s) with that/those on file with us for this individual, entity or company and signer(s) is/are authorized to execute this agreement. We attest that the individual, company or entity has been identified by us in compliance with USA PATRIOT Act procedures of our bank.
_______________________________________
PNC Bank, National Association
_______________________________________
(Address of Bank)
_______________________________________
(City, State, Zip Code)
_______________________________________
(Print Name and Title of Authorized Signer)
_______________________________________
(Authorized Signature)
Acknowledged:
____________________________________
(Print Name of Transferee)
____________________________________
(Transferee’s Authorized Signature)
____________________________________
(Print Transferee’s Authorized
Signer’s Name and Title)
____________________________________
(Transferee’s Number/Fax Signature)

I-14

SIGNATURE GUARANTEED
Signature(s) with title(s) conform(s) with that/those on file with us for this individual, entity or company and signer(s) is/are authorized to execute this agreement. We attest that the individual, company or entity has been identified by us in compliance with USA PATRIOT Act procedures of our bank.
_______________________________________
PNC Bank, National Association
_______________________________________
(Address of Bank)
_______________________________________
(City, State, Zip Code)
_______________________________________
(Print Name and Title of Authorized Signer)
_______________________________________
(Authorized Signature)
Acknowledged as of __________, 20___
PNC Bank, National Association
By: _________________________________
Name: ___________________________
Title: ____________________________

I-15

ANNEX C
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [________]
CERTIFICATE RE: ALTERNATE FACILITY

PNC Bank, National Association
[___________]
The undersigned, a duly authorized officer of U.S. Bank Trust Company, National Association, as Issuing and Paying Agent (the “Issuing and Paying Agent” ), hereby certifies to PNC Bank, National Association (the “Bank”), with reference to Irrevocable Transferable Direct-Pay Letter of Credit No. [_______] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein, as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows:

1. The undersigned is the Issuing and Paying Agent under t he Issuing and Paying Agent Agreement for the holders of the Series A-4/A-4-T Commercial Paper Notes.

2. The conditions precedent to the acceptance of an Alternate Facility set forth in the Issuing and Paying Agent Agreement have been satisfied.

3. An Al ternate Facility in full and complete substitution for the Letter of Credit has been accepted by the Issuing and Paying Agent and is or will be in effect as of __________, _____.

4. There will be no further Drawings under the Letter of Credit.

5. Upon the later of (a) receipt by you of this Certificate and (b) the effective date of the Alternate Facility as specified in paragraph 3 above (after you honor any properly presented and conforming Drawing on or prior to such date), the Letter of Credit will terminate with respect to all outstanding Series A-4/A-4-T Commercial Paper Notes, and the Letter of Credit (and any amendments thereto) is returned to you herewith for cancellation.

6. No payment is demanded of you in connection with this Certificate.

I-16
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate on this _____ day of __________, _____.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION , as Issuing and Paying Agent
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-17

ANNEX D
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [______]
CERTIFICATE RE: NO OUTSTANDING NOTES
PNC Bank, National Association
The undersigned, a duly authorized officer of U.S. Bank Trust Company, National Association, as Issuing and P aying Agent (the “Issuing and Paying Agent” ), hereby certifies to PNC Bank, National Association (the “Bank”), with reference to Irrevocable Transferable Direct-Pay Letter of Credit No. [_______] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the issuing and Paying Agent, as follows:

1. The undersigned is the Issuing and Paying Agent under the Issuing and Paying Agent Agreement for the holders of the Series A-4/A-4-T Commercial Paper Notes.

2. No Series A-4/A-4-T Commercial Paper Notes (other than Series A-4/A-4- T Commercial Paper Notes with respect to which an Alternate Facility is in effect) remain outstanding under the Issuing and Paying Agent Agreement nor does the Commission intend to issue any additional Series A-4/A-4-T Commercial Paper Notes under the Issuing and Paying Agent Agreement.

3. There will be no further Drawings under the Letter of Credit, and the Issuing and Paying Agent hereby elects to terminate the Letter of Credit and returns such Letter of Credit to you herewith for cancellation.

4. No payment is demanded of you in connection with this Certificate.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate on this _____ day of __________, _____.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION , as Issuing and Paying Agent
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-18

ANNEX E
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [_______]
NOTICE RE: FINAL DRAWING
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
Reference is made to Irrevocable Transferable Direct -Pay Letter of Credit No. [ ______] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by PNC Bank, National Association in your favor as Issuing and Paying Agent.

We hereby notify you that:

1. An Event of Default under and as defined in the Reimbursement Agreement has occurred and is continuing.

2. The Bank instructs the Issuing and Paying Agent, effective upon receipt of this Notice, to cease issuing Series A -4/A-4-T Commercial Paper Notes .

3. The Bank notifies the issuing and Paying Agent that: (i) effective upon receipt of this Certificate, the Stated Amount available to be drawn under the Letter of Credit will not be reinstated in accordance with the Letter of Credit; (ii) the Issuing and Paying Agent is instructed to make the final Drawing under the Letter of Credit to provide for the payment of Series A -4/A-4-T Commercial Paper Notes issued in accordance with the Issuing and Paying Agent Agreement which are outstanding and are maturing or are hereafter to mature; and (iii) the Termination Date of the Letter of Credit will occur and the Letter of Credit will expire on the earlier of (a) the date which is the 15th calendar day after the date of receipt by the issuing and Paying Agent of this Notice and (b) the date on which the Drawing resulting from the delivery of this Notice is honored by us.

Very truly yours,
PNC

BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________
I-19

ANNEX F
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [_______]

DECREASE NOTICE
[Date]
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
We hereby notify you, with reference to Irrevocable Transferable Direct -Pay Letter of Credit No. LG/M1S/NY-192094 (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, that the Stated Amount of the Letter of Credit will be decreased by the amount of $__________, effective __________, _____ (the “Decrease Date” ). The Stated Amount of the Letter of Credit after giving effect to such decrease is $__________, of which $__________ is applicable to principal and is applicable to interest, which amount is not less than the aggregate outstanding principal amount of Series A-4/A-4-T Commercial Paper Notes on the Decrease Date plus interest thereon calculated at the rate of twelve percent (12%) per annum for a period of 270 days and on the basis of a year of 360 days. This Notice is an amendment to and must be attached to the Letter of Credit and made a part thereof.

All other terms and conditions of the Letter of Credit remain unchanged.

Very truly yours,

PNC BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-20

ANNEX G
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [______]

NOTICE OF EXTENSION OF STATED EXPIRATION DATE
[Date]
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
We hereby notify you with reference to Irrevocable Transferable Direct -Pay Letter of Credit No. [________] (the “Letter of Credit”; terms used herein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, as follows:

1. The Stated Expiration Date of the Letter of Credit has been extended to __________, _____.

2. This Notice is an amendment to and must be attached to the Letter of Credit and made a part thereof.

All other terms and conditions of the Letter of Credit remain unchanged.

Very truly yours,

PNC BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-21

ANNEX H
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABL E TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [_______]

NO ISSUANCE NOTICE
[Date]
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
We hereby not ify you, with reference to Irrevocable Transferable Direct Pay Letter of Credit No. [_______] (the “Letter of Credit”; terms used herein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, as follows:

1. In accordance with the terms of the Reimbursement Agreement, an Event of Default (as defined in the Reimbursement Agreement) has occurred and is continuing.

2. Subject to the following sentence, you must cease authenticating Series A- 4/A-4-T Commercial Paper Notes, as provided in the Issuing and Paying Agent Agreement, unless and until we rescind this No-Issuance Notice. If you receive this No-Issuance Notice at or before 10:00 a.m. New York City time on a Business Day, you must cease authenticating Series A-4/A-4-T Commercial Paper Notes on that Business Day, and if you receive this No-Issuance Notice after 10:00 a.m. New York City time on a Business Day you must cease authenticating Series A -4/A-4-T Commercial Paper Notes on the next Business Day.

3. This No-Issuance Notice will not affect our obligation to honor demands for payment under the Letter of Credit with respect to Series A-4/A-4-T Commercial Paper Notes authenticated prior to your receipt of this No- Issuance Notice (or, subject to paragraph 2 above, on the same Business Day that you receive this No- Issuance Notice), and you will continue to have the right to draw under the Letter of Credit to pay the principal of and accrued interest on maturing Series A-4/A-4-T Commercial Paper Notes authenticated prior to your receipt of this No- Issuance Notice (or, subject to paragraph 2 above, authenticated on the same Business Day that you receive this No-Issuance Notice).

I-22
Very truly yours,

PNC BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

I-23

ANNEX I
TO

PNC BANK, NATIONAL ASSOCIATION

IRREVOCABLE TRANSFERABLE DIRECT-PAY
LETTER OF CREDIT NO. [______]
NOTICE RE: REINSTATEMENT OF STATED AMOUNT
[Date]
U.S. Bank Trust Company, National Association,
as Issuing and Paying Agent
100 Wall Street, Suite 1600
New York, New York 10005
Attention: MMI Operations
We hereby notify you, with reference to Irrevocable Transferable Direct -Pay Letter of Credit No. [ _________] (the “Letter of Credit” ; terms used herein and not otherwise defined herein being used herein as therein defined) issued by us in your favor, that we have been reimbursed by or on behalf of the Commission for an amount drawn under the Letter of Credit and that the Stated Amount of the Letter of Credit will be reinstated by the amount of $__________, effective as of __________, _____. The Stated Amount of the Letter of Credit after such reinstatement is $__________, of which $__________ is applicable to principal and $__________ is applicable to interest. You are hereby directed to attach this Notice to the Letter of Credit. This Notice is an amendment to and must be attached to the Letter of Credit and made a part thereof.

All other terms and conditions of the Letter of Credit remain unchanged.

Very truly yours,
PNC

BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: ______________________________

EXHIBIT A

FORM OF BANK NOTE

SAN FRANCISCO PUBLIC UTILITIES COMMISSION BANK NOTE
(WATER SERIES, TAX EXEMPT SUBSERIES A-4
AND TAXABLE SUBSERIES A-4-T)
$150,000,000
not to exceed aggregate principal amount of
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Water Series, Proposition E)
Tax Exempt Subseries A-4
Taxable Subseries A-4-T
$163,500,000 February [_], 2025
For Value Received, the undersigned, PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), hereby promises to pay to the order of PNC Bank, National Association (the “Bank”), at its office at [•], [•], [•], [•], in the manner and on the dates provided in the Reimbursement Agreement, dated as of February 1, 2025 (the “Reimbursement Agreement”), by and between the Commission and the Bank, in lawful money of the United States of America and in immediately available funds, the sum of $163,500,000, or, if less, the aggregate outstanding principal amount of the Reimbursement Obligations from time to time owing to the Bank under the Reimbursement Agreement. Terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Reimbursement Agreement.

The Commission further promises to pay interest from the date hereof on the outstanding Reimbursement Obligations from time to time at the rates and times and in all cases in accordance with the terms of th e Reimbursement Agreement. The Bank may endorse its books and records relating to this Bank Note with appropriate notations evidencing the amounts drawn under the Letter of Credit and payments of principal hereunder as contemplated by the Reimbursement Agreement.

This Bank Note is issued pursuant to, is entitled to the benefits of, and is subject to, the provisions of the Issuing and Paying Agent Agreement, the Reimbursement Agreement and the other Basic Documents, as further supplemented and amended in ac cordance with the terms of thereof. Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Bank Note may be declared due prior to the expressed maturity hereof, all on the terms and in the manner provided for in the Reimbursement Agreement.

A-2
The parties hereto, including the undersigned maker and all guarantors, endorsers and pledgors that may exist at any time with respect hereto, hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Bank Note and assent to the extensions of the time of payment or forbearance or other indulgence without notice.

This Bank Note is secured by and payable from Pledged Revenues.

This Bank Note and the obligations of the Commission hereunder shall be governed by and construed in accordance with the laws of the State of California without giving effect to conflict of laws provisions.

IN WITNESS WHEREOF, the Commission has caused this San Francisco Public Utilities Commission Bank Note (Water Series, Tax Exempt Subseries A-4 and Taxable Subseries A-4-T) to be signed in its corporate name as an instrument by its duly authorized officer on the date and in the year first above wri tten.

P

UBLIC UTILITIES COMMISSION OF THE CITY AND

COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: _____________________________
Title: ______________________________
Approved as to Form:

City Attorney of the City
and County of San Francisco
By: _________________________________
Name:

Title:

Acknowledged:

Director of Public Finance of the
City and County of San Francisco
By: _________________________________
Director of Public Finance

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate (this “ Certificate”) is furnished to PNC Bank, National Association (the “Bank”) pursuant to Section 5.1(a)(i) of the Reimbursement Agreement, dated as of February 1, 2025 (the “Reimbursement Agreement”), by and between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and the Bank. Terms used herei n and not otherwise defined herein shall have the meanings assigned to them in the Reimbursement Agreement.

The undersigned hereby certifies that:

1. I am an Authorized Representative of the Commission;

2. have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the activities, transactions and conditions of the Commission during the accounting period covered by the attached financial sta tements for the purpose of determining whether or not the Commission has complied with all of the terms, provisions and conditions of the Reimbursement Agreement and the other Basic Documents;

3. To the best of my knowledge, the financial statements requi red by Section 5.1(a)(i) of the Reimbursement Agreement and being furnished to you concurrently with this Certificate present fairly the financial position of the Commission as of the date they purport to represent and the revenues, expenses and changes in fund balances and in financial position for the periods then ended;

4. Based on the examinations described in paragraph 2: Check One of the Following:

No Default or Event of Default has occurred and is continuing; or A Default or Event of Default has occurred and is continuing, under the following circumstances:
[Include description of circumstances and Commission remedial actions. ]

5. Based on the examinations described in paragraph 2: Check One of the Following:

The representations and wa rranties of the Commission contained in Article Four of the Reimbursement Agreement are true and correct; or B-2
The following representations and warranties of the Commission contained in Article Four of the Reimbursement Agreement are not true and correct, under the following circumstances:
[Include description of circumstances and Commission remedial actions.] The foregoing certifications and the financial statements delivered with this Certificate are hereby made and delivered this _____ day of __________, _____.

PUBLIC UTILITIES COMMISSION OF THE CITY AND

COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: _____________________________
Title: ______________________________

EXHIBIT C
2025 LIST OF CITY HOLIDAYS

New Year’s Day: January 1, 2025
Dr. Martin Luther King, Jr. Day: January 20, 2025
Presidents’ Day: February 17, 2025
Memorial Day: May 26, 2025
Juneteenth: June 19, 2025
Independence Day: July 4, 2025
Labor Day: September 1, 2025
Indigenous Peoples’ Day: October 13, 2025
Veterans’ Day: November 11, 2025
Thanksgiving Day and the day after: November 27, 2025 and November 28, 2025 Christmas Day: December 25, 2025

EXHIBIT D

CITY REQUIREMENTS
[Updated list to be provided by the City Attorney]

CHAPMAN DRAFT
JANUARY 13, 2025
1304418672-4__fee_agreement__sfpuc___pnc___3_
4458097

FEE AGREEMENT
This FEE AGREEMENT dated February 18, 2025 (as amended, modified or restated from time to time in accordance with its terms , the “Fee Agreement”), is by and between the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) and PNC BANK, NATIONAL ASSOCIATION (together with its successors and assigns, the “Bank” ).

Reference is made to the Letter of Credit dated February 18, 2025 (as amended, modified, extended or restated from time to time in accordance with its terms, the “Letter of Credit”), issued pursuant to the Reimbursement Agreement dated as of February 1, 2025 (as amended, modified or restated from time to time in accordance with its terms , the “Agreement”), between the Commission and the Bank, relating to the Commission’s Commercial Paper Notes (Water Series, Proposition E ) Tax -Exempt Subseries A -4 and Taxable Subseries A -4-T (collectively, the “Notes”). Capitalized terms not otherwise defined herein have the meanings set forth in the Agreement or the Letter of Credit, as applicable.

The purpose of this Fee Agreement is to confirm the agreement between the Bank and the Commission with respect to the Letter of Credit Fees (as defined below) and certain other fees payable by the Commission to the Bank in connection with the Agreement. This Fee Agreement is the Fee Agreement referenced in the Agreement and the terms of this Fee Agreement are incorporated by reference into the Agreement. This Fee Agreement and the Agreement are to be construed as one agreement between the Commission and the Bank, and all obligations hereunder are to be construed as obligations thereunder. All references to amounts due and payable under the Agreement will be deemed to include all amounts, fees and expenses payabl e under this Fee Agreement.

ARTICLE I
FEES
Section 1.1. Letter of Credit Fees . The Commission agrees to pay to the Bank, in immediately available funds, without any requirement of notice or demand, on April 1, 2025, for the period from and including the Closing Date to and including March 31, 2025, and in arrears on the first Busi ness Day of each July, October , January and April occurring thereafter to the Termination Date, and on the Termination Date, a non- refundable letter of credit fee (the “Letter of Credit Fee”) in an amount equal to the product of (x) the rate per annum asso ciated with the Rating (as defined below) as specified in the applicable Level in the pricing matrix below (the “Letter of Credit Fee Rate”) for each day during each related period multiplied by (y) the Stated Amount (without regard to any temporary reduct ions of the Stated Amount) for each day during each related period.

LEVEL S&P RATING/FITCH
RATING
MOODY’S
RATING

LETTER OF CREDIT

FEE RATE
Level 1 AA- or above Aa3 or above 0.30%
Level 2 A+ A1 0.30%
Level 3 A A2 0.40%
Level 4 A- A3 0.50%
-2-

LEVEL S&P RATING/FITCH
RATING
MOODY’S
RATING

LETTER OF CREDIT

FEE RATE
Level 5 BBB+ or below Baa1 or below Default Rate
The term “Rating” as used above means the lowest long-term unenhanced rating assigned to any Senior Debt by any of S&P, Moody’s or Fitch (to the extent rated by Fitch at the request of the Commission) . In the event of a split rating (i.e., the Rating of one Rating Agency is at a different Level from the Rating of either of the other Rating Agenc ies), the Letter of Credit Fee Rate will be based on the Level in which the lowest Ratings appears. Any change in the Letter of Credit Fee Rate resulting from a change in a Rating will be and become effective as of and on the date of the announcement of the change in such Rating. For the avoidance of doubt, Level 5 is the Level with the lowest Ratings, and Level 1 is the Le vel with the highest Ratings for purposes of the above pricing matrices. References to ratings above are references to rating categories as determined by the Rating Agencies at the date hereof and, in the event of adoption of any new or changed rating sys tem by any Rating Agency, each of the Ratings referred to above from the Rating Agency in question will be deemed to refer to the rating category under the new rating system which most closely approximates the applicable rating category as in effect at the date hereof. The Commission acknowledges that as of the Closing Date the Letter of Credit Fee Rate is that specified above for Level 1. If an Event of Default occurs and is continuing, the Letter of Credit Fee Rate will immediately and without notice in crease by an additional 2.00% per annum above the Letter of Credit Fee Rate otherwise in effect. The Letter of Credit Fees shall be payable quarterly in arrears, as specified above, together with interest on the Letter of Credit Fees from the date payment is due until payment in full at the Default Rate. The Letter of Credit Fees will be payable in immediately available funds and computed on the basis of a 360-day year and the actual number of days elapsed.

Section 1.2. Drawing Fees. The Commission agrees to pay to the Bank a non-refundable drawing fee of $250 for each drawing under the Letter of Credit, payable without any requirement of invoice on the date such drawing is made.

Section 1.3. Amendment Waiver or Consent Fees. The Commission agrees to pay to the Bank on the date (i) of each amendment, supplement or modification to the Agreement or any other Basic Document or (ii) on which the Bank consents or provides a waiver with respect to the Agreement or any other Basic Document, a non- refundable fee in a minimum amount of $2,500, plus attorney’s fees (including, without limitation , the legal fees of counsel to the Bank) and expenses, at the time of such amendment, supplement or modification or waiver or consent.

Section 1.4. Transfer Fee. Upon each transfer of the Letter of Credit in accordance with its terms or appointment of a successor Issuing and Paying Agent under the Issuing and Paying Agent Agreement, the Commission agrees to pay the Bank a non- refundable fee in a minimum amount of $2,500, plus attorney’s fees and expenses, and to reimburse the Bank for its actual costs and expenses associated with such transfer or appointment (including, but not limited to, the reasonable fees and expenses of legal counsel to the Bank), payable on the date of such transfer or appointment.
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Section 1.5. Termination Fee; Reduction Fee. (a) The Commission hereby agrees to pay to the Bank a termination fee in connection with any termination or replacement of the Letter of Credit by the Commission prior to the first anniversary of the Closing Date, in an amount equal to the product of (1) the Letter of Credit Fee Rate in effect on the date of such termination or replacement, (2) the Stated Amount (without regard to any reduction of the Stated Amount subject to reinstatement) in effect as of the date of termination and (3) a fraction, the numerator of which is equal to the number of days from and including the date of such termination or replacement to and including the first anniversary of the Closing Date, and the denominator of which is 360 (the “Termination Fee”), payable on the date of such termination or replacement ; provided, however, that no Termination Fee shall become payable if the Letter of Credit is terminated or replaced as a result of (i) a reduction of the Bank’s senior unsecured short-term ratings below “A-1” by S&P or “P-1” by Moody’s (provided, that for the avoidance of doubt, the ratings referenced in this clause (i) shall mean those ratings assigned to PNC Bank, National Association and not ratings assigned to PNC Bank, National Association’s parent or holding company or any other affiliate of PNC Bank, National Association) ; (ii) the Bank has imposed and the Commission has paid increased costs upon the Commission pursuant to Section 2.14 of the Agreement, or (iii) the ability of the Commission to issue Commercial Paper Notes being terminated or the Commission’s commercial paper program being permanently retired and so long as no portion of the source of funds for such termination of the ability of the Commission to issue Commercial Paper Notes or the permanent retirement of the commercial paper program represents proceeds o f commercial paper or similar short-term indebtedness supported by a letter of credit, liquidity facility or another form of liquidity support or credit enhancement or directly purchased in a non- public offering by a bank or other financial institution. No termination of the Agreement or the Letter of Credit shall become effective unless and until all amounts payable by the Commission to the Bank under the Agreement and this Fee Agreement (including without limitation the amount payable, if any, pursuant to this Section 1.5) have been paid in full.
(b) Notwithstanding the foregoing and anything set forth herein or in the Agreement to the contrary, the Commission agrees not to permanently reduce the Stated Amount below the Stated Amount in effect as of th e Closing Date prior to the first anniversary of the Closing Date, without the payment by the Commission to the Bank of a reduction fee in connection with each and every permanent reduction of the Available Commitment in an amount equal to the product of ( A) the Letter of Credit Fee Rate in effect on the date of such permanent reduction, (B) the difference between the Stated Amount (without regard to any permanent reduction of the Stated Amount subject to reinstatement) prior to such permanent reduction and the Stated Amount (without regard to any permanent reduction of the Stated Amount subject to reinstatement) after such permanent reduction, and (C) a fraction, the numerator of which is equal to the number of days from and including the date of such permanent reduction to and including the first anniversary of the Closing Date, and the denominator of which is 360 (the “Reduction Fee” ) ; provided, however, that no Reduction Fee shall become payable if the Stated Amount is permanently reduced as a result of (i) a reduction of the Bank’s senior unsecured short -term ratings below “A -1” by S&P or “P-1” by Moody’s (provided, that for the avoidance of doubt, the ratings referenced in this clause (i) shall mean those ratings assigned to PNC Bank, National Associati on and not ratings assigned to PNC Bank, National Association’s parent or holding company or any other affiliate of PNC Bank, National Association) ; (ii) the Bank has imposed and the Commission has paid increased costs upon the Commission pursuant to Section 2.14 of the Agreement, or (iii) the ability -4-
of the Commission to issue Commercial Paper Notes being reduced or the Commission’s commercial paper program being permanently reduced and so long as no portion of the source of funds for such reduction of the ability of the Commission to issue Commercial Paper Notes or the permanent reduction of the commercial paper program represents proceeds of commercial paper or similar short-term indebtedness supported by a letter of credit, liquidity facility or another form of liquidity support or credit enhancement or directly purchased by a bank or other financial institution. No reduction of the Stated Amount shall become effective unless and until all amounts payable by the Commission to the Bank under the Agreement and this Fee Agreement (including without limitation the amount payable, if any, pursuant to this Section 1.5) have been paid in full.

ARTICLE II

MISCELLANEOUS
Section 2.1. Legal Fees . The Commission shall pay the reasonable legal fees and expenses of counsel to the Bank incurred in connection with the preparation and negotiation of the Agreement and this Fee Agreement in an amount not to exceed $50,000 plus disbursements for counsel to the Bank.

Section 2.2. Amendments. No amendment to this Fee Agreement will become effective without the prior consent of the Commission and the Bank, which consent must be in writing and signed by the Bank and an Authorized Representative of the Commi ssion.

Section 2.3. Governing Law . THIS FEE AGREEMENT SHALL BE GOVERNED BY , AND

CONSTRUED IN ACCORDANCE WITH , THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PROVISIONS .

Section 2.4. Counterparts. This Fee Agreement may b e executed in two or more counterparts, each of which will constitute an original but both or all of which, when taken together, will constitute but one instrument. This Fee Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by attaching a pdf copy to an email, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page.

Section 2.5. Severability. Any provision of this Fee Agreement which is prohibited, unenforceable or not authorized in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non- authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

Section 2.6. Confidentiality. Unless required by law, the Commission shall not disclose, directly or indirectly, this Fee Agreement or any of its terms to any other Person except (a) to officers, directors, employees, accountants, attorneys, agents and advisors of the Commission who are directly involved in the consideration of this matter and the financial advisor to the Commission on a confidential and need-to-know basis, (b) under compulsion of law (whether by interrogatory, subpoena, civil investigative demand or otherwise) and (c) by order of any court or governmental or regulatory body.
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Section 2.7. No Disclosure. Unless required by law, the Commission shall not deliver or permit, authorize or consent to the delivery of this Fee Agreement to any Person or for posting on the Electronic Municipal Market Access website as provided by the Municipal Securities Rulemaking Board unless the Bank provides its prior written consent.

Section 2.8. Representation by Legal Counsel; Joint Preparation. The parties hereto have participated jointly in the negotiation and drafting of this Fee Agreement, and each of the parties was represented by its respective legal counsel during the negotiation and execution of this Fee Agreement. In the event an ambiguity or question of intent or interpretation arises, this Fee Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Fee Agreement .
[S
IGNATURE PAGES TO FOLLOW]

Signature Page to SFPUC-PNC Fee Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Fee Agreement to be duly executed and delivered by their respective officers or representatives thereunto duly authorized on the date first set forth above.

PUBLIC UTILITIES COMMISSION OF THE CITY AND

COUNTY OF SAN FRANCISCO
By: ____________________________________
Name: Dennis J. Herrera
Title: General Manager
Approved as to Form:

DAVID CHIU
City Attorney of the City and
County of San Francisco
By: ____________________________________
Name: Katherine Thursby Ortega
Title: Deputy City Attorney
Acknowledged:

ANNA VANDEGNA
Director of Public Finance of the City
and County of San Francisco
By: ____________________________________

Signature Page to SFPUC-PNC Fee Agreement

PNC BANK, NATIONAL ASSOCIATION
By: ____________________________________
Name: ____________________________
Title: _____________________________

4904 -3278 -7975.5

ISSUING AND PAYING AGENT AGREEMENT
Dated as of February 1, 2025
by and between

PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY

OF SAN FRANCISCO
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Issuing and Paying Agent
Relating to

PUBLIC UTILITIES COMMISSION

OF THE CITY AND COUNTY OF SAN FRANCISCO

COMMERCIAL PAPER NOTES
(WATER SERIES, PROPOSITION E)
$150,000,000
TAX-EXEMPT SUBSERIES A-4
TAXABLE SUBSERIES A-4-T

Table of Contents

Page

4904 -3278 -7975.5

ARTICLE I

DEFINITIONS
Section 1.01. Definitions ..........................................................................................................2 Section 1.02. Interpretation..................................................................................................... 12 Section 1.03. Agreement to Constitute Contract ....................................................................... 12

ARTICLE II
GENERAL AUTHORIZATION AND ISSUANCE; THE COMMERCIAL PAPER NOTES Section 2.01. Authorized Amount of Commercial Paper Notes; Terms and Description of Commercial Paper Notes .................................................................................... 12 Section 2.02. Payment ............................................................................................................ 13 Section 2.03. Authentication of Commercial Paper Notes ......................................................... 14 Section 2.04. Form of Commercial Paper Notes and Authentication Certificate .......................... 14 Section 2.05. Book-Entry System............................................................................................ 15 Section 2.06. Conditions Precedent to Delivery of Commercial Paper Notes .............................. 17 Section 2.07. Commercial Paper Notes .................................................................................... 19 Section 2.08. Mutilated, Lost, Stolen or Destroyed Commercial Paper Notes ............................. 19 Section 2.09. Surrender of Commercial Paper Notes ................................................................ 19 Section 2.10. Execution and Authentication of Commercial Paper Notes ................................... 20 Section 2.11. Temporary Commercial Paper Notes ................................................................... 20 Section 2.12. Non-Presentment of Commercial Paper Notes; Unclaimed Money ........................ 21 Section 2.13. SPANS Online .................................................................................................. 21 Section 2.14. Representations and Warranties of the Commission ............................................. 22

ARTICLE III
FUNDS AND ACCOUNTS; APPLICATION OF NOTE PROCEEDS
Section 3.01. Establishment and Designation of Funds and Accounts ........................................ 23 Section 3.02. Deposit of Proceeds of Commercial Paper Notes ................................................. 23 Section 3.03. Application of Moneys in Construction Fund ....................................................... 23 Section 3.04. Deposits Into and Uses of the Debt Service Account and the Bank Payment Account ............................................................................................................ 23 Section 3.05. Drawings Under the Letter of Credit ................................................................... 24 Section 3.06. Investments Authorized ..................................................................................... 24 Section 3.07. Moneys Remaining in Funds and Accounts ......................................................... 25

ARTICLE IV

THE BANK NOTES
Section 4.01. Authorization and Terms of Bank Notes.............................................................. 25 Section 4.02. Form of Bank Notes and Authentication Certificate ............................................. 25 Section 4.03. No Transfers of Bank Notes ............................................................................... 26 Section 4.04. Deposits of Available Water Enterprise Revenues in Bank Note Account .............. 26

ARTICLE V
COVENANTS; REPRESENTATIONS
Section 5.01. No Arbitrage ..................................................................................................... 26 Table of Contents
(continued)
Page

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Section 5.02. Rebate to United States ...................................................................................... 26 Section 5.03. Tax Covenant .................................................................................................... 27 Section 5.04. Taxable Commercial Paper Notes ....................................................................... 27 Section 5.05. Letter of Credit .................................................................................................. 27 Section 5.06. Amounts of Rates and Charges ........................................................................... 28 Section 5.07. Limitation on Additional Debt ............................................................................ 28 Section 5.08. Financial Statements .......................................................................................... 28

ARTICLE VI
PLEDGE OF AVAILABLE REVENUES; LIMITED LIABILITY OF THE COMMISSION Section 6.01. Available Water Enterprise Revenues ................................................................. 28 Section 6.02. Limited Obligations ........................................................................................... 28

ARTICLE VII
ISSUING AND PAYING AGENT; DEALER
Section 7.01. Appointment of Issuing and Paying Agent........................................................... 29 Section 7.02. Reports, Records and Accounts .......................................................................... 29 Section 7.03. Duties ............................................................................................................... 30 Section 7.04. Compensation ................................................................................................... 30 Section 7.05. Liability; Indemnification................................................................................... 30 Section 7.06. Additional Information ...................................................................................... 31 Section 7.07. Resignation and Replacement of Issuing and Paying Agent .................................. 32 Section 7.08. Dealers ............................................................................................................. 32 Section 7.09. Compliance with City Requirements ................................................................... 33

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF COMMERCIAL PAPER NOTEHOLDERS Section 8.01. Events of Default ............................................................................................... 33 Section 8.02. Suits at Law or in Equity and Mandamus ............................................................ 33 Section 8.03. Remedies Not Exclusive .................................................................................... 33 Section 8.04. Bank to Control Remedies.................................................................................. 34 Section 8.05. Waiver of Events of Default ............................................................................... 34

ARTICLE IX

MISCELLANEOUS
Section 9.01. Supplemental Agreements .................................................................................. 34 Section 9.02. Alternate Facility ............................................................................................... 34 Section 9.03. Amendments to Water Bonds Indenture .............................................................. 35 Section 9.04. Timeliness of Deposits ....................................................................................... 35 Section 9.05. Discharge and Defeasance of Commercial Paper Notes ........................................ 35 Section 9.06. Payments or Actions Occurring on Non -Business Days ........................................ 36 Section 9.07. Notices to Rating Agencies ................................................................................ 36 Section 9.08. Issuance Requests; Addresses ............................................................................. 36 Section 9.09. Reserved ........................................................................................................... 38 Section 9.10. Governing Law ................................................................................................. 38 Section 9.11. Assignment; Issuing and Paying Agent’s Successor in Interest ............................. 38 Table of Contents
(continued)
Page

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Section 9.12. Complete Agreement ......................................................................................... 38 Section 9.13. Counterparts...................................................................................................... 38 Section 9.14. Section Headings ............................................................................................... 39 Section 9.15. Waiver of Set-Off, Offset Lien or Counterclaims ................................................. 39 Section 9.16. Benefit of Agreement......................................................................................... 39 Section 9.17. Covenant of Further Assurances ......................................................................... 39 Section 9.18. Waiver of Personal Liability ............................................................................... 39 Section 9.19. Acquisition of the Commercial Paper Notes by the Commission ........................... 39 Section 9.20. Notice by Mail .................................................................................................. 39 Section 9.21. Partial Invalidity ................................................................................................ 39 Section 9.22. Reference to the Bank ........................................................................................ 40 Section 9.23. City Requirements ............................................................................................. 40 Section 9.24. Trade; Service Marks ......................................................................................... 40 EXHIBIT A-1 FORM OF WATER ENTERP RISE SERIES A-4 COMMERCIAL PAPER NOTE EXHIBIT A-2 FORM OF WATER ENTERPRISE SERIES A-4-T COMMERCIAL PAPER NOTE EXHIBIT B-1 FORM OF SUBSERIES A-4 MASTER NOTE
EXHIBIT B-2 FORM OF SUBSERIES A-4-T MASTER NOTE

EXHIBIT C FORM OF CERTIFICATE OF DESIGNATED REPRESENTATIVES

EXHIBIT D FORM OF ISSUANCE REQUEST

EXHIBIT E SCHEDULE OF FEES AND EXPENSES FOR ISSUING AND PAYING AGENT

SERVICES

EXHIBIT F CITY REQUIREMENTS

4904 -3278 -7975.5

ISSUING AND PAYING AGENT AGREEMENT

W I T N E S S E T H
This Issuing and Paying Agent Agreement (this “Agreement”) is dated as of February 1, 2025, by and between the Public Utilities Commission of the City and County of San Francisco (the “Commission”), organized and existing under the Charter (as defined below) of the City and County of San Francisco (the “City”) and U.S . Bank Trust Company, National Association, as Issuing and Paying Agent; WHEREAS, on November 5, 2002, the voters of the City approved Proposition E (“Proposition E”), which among other things, authorized the Commission to issue indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors of the City (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities under the jurisdiction of this Commission (the “Water Enterprise”, as further defined herein); and
WHEREAS, pursuant to Article V of Section 43 of Part I of the San Francisco Administrative Code, (“Article V”), the Board has established a procedure pursuant to which the Commission may issue short-term indebtedness (including commercial paper notes and other forms of indebtedness) in anticipation of the issuance of its revenue bonds; and
WHEREAS, (i) the Commission has previously authorized pursuant to Resolution No. 03-0048, approved by the Commission on March 25, 2003, and the Board has previously approved pursuant to Ordinance No. 300-03, adopted by the Board on May 6, 2003, and signed by the Mayor on May 16, 2003, the establishment of a commercial paper program/interim funding program (the “Water Interim Funding Program”) for the Water Enterprise and the issuance of up to $250 million, at that time, in aggregate principal amount of Water Enterprise commercial paper notes and/or bank notes outstanding at any one time; (ii) the Commission has previously authorized pursuant to Resolution No. 08-0202, approved by the Commission on October 30, 2008, and the Board has previously approved pursuant to Ordinance No. 311- 08, adopted by the Board on December 16, 2008 and signed by the Mayor on December 19, 2008, an increase in the Water Interim Funding Program from an aggregate principal amount of $250 million to an aggregate principal amount of $500 million outstanding at any one time; and (iii) the Commission has authorized pursuant to Resolution No. 24-0193, approved by the Commission on September 10, 2024, and the Board has approved pursuant to Ordinance No. 269-24, adopted by the Board on November 19, 2024 and signed by the Mayor on November 25, 2024, an increase in the Water Interim Funding Program from an aggregate principal amount of $250 million to an aggregate principal amount of $500 million outstanding at any one time; and
WHEREAS, pursuant to (i) Ordinance No. 174-20 adopted by the Board on September 29, 2020 and signed by the Mayor on October 1, 2020, (ii) Ordinance No. 112-22, adopted by the Board on June 14, 2022 and signed by the Mayor on June 24, 2022, (iii) Ordinance No. 180-23, adopted by the Board on July 25, 2023 and signed by the Mayor on July 28, 2023, and (iv) Ordinance No. 131-24 adopted by the Board on June 18, 2024 and signed by the Mayor on June 27, 2024, the Board has authorized the issuance from time to time of up to $1,887,552,493 of water revenue bonds and other forms of indebtedness of the Commission under Proposition E, and in the anticipation of the issuance of such indebtedness, has authorized the issuance of short -term indebtedness of the Commission; and WHEREAS, the amount of authorized but unissued water revenue bonds under the ordinances set forth in the immediately preceding whereas clause is $1,696,974,012; and

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WHEREAS, pursuant to Resolution No. 25-[_____] (the “Resolution”), adopted by the Commission on February 11, 2025, the Commission approved the issuance of the Commercial Paper Notes (as described herein), and approved the execution of related documents; and WHEREAS, in order to provide credit enhancement to support the payment of a portion of the maturing c ommercial paper notes, the Commission has determined to authorize a letter of credit, in an original stated principal amount not -to-exceed $150,000,000, plus an amount equal to 270 days interest on such principal amount , to be issued by PNC Bank, National Association , pursuant to the terms of a reimbursement agreement; and
WHEREAS, pursuant to the Resolution, t he General Manager, the Deputy Chief Financial Officer and the Capital Finance Director of the Commission are each authorized to execute the Reimbursement Agreement relating to the Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) $150,000,000 Tax-Exempt Subseries A-4 and Taxable Subseries A-4-T; and
WHEREAS, in order to accommodate the terms of the letter of credit, issued by PNC Bank, National Association , the Commission has authorized the execution of this Agreement; and WHEREAS, the Commission is authorized to issue, sell and deliver bonds, additional bonds, refunding bonds and other evidences of indebtedness in order to effect its purposes pursuant to the Ordinances (as defined herein) and the Resolution, including the financing and refinancing of any Drawings (as defined herein); and
WHEREAS, the aggregate principal amount of Commercial Paper Notes outstanding under this Agreement at any time shall not exceed $150 million;
NOW, THEREFORE, in consideration of the premises and in order to induce the Issuing and Paying Agent to enter into this Agreement, the Issuing and Paying Agent and the Commission agree as follows:

ARTICLE I

DEFINITIONS
Section 1.01. Definitions. Except as otherwise defined in this Agreement (including the preambles), capitalized terms herein shall have the meanings assigned thereto in this Section 1.01. The following definitions shall apply to terms used in this Agreement, unless the context clearly requires otherwise:
“Advance” means an Advance or a Term Loan, as such terms are defined in the Reimbursement Agreement.
“Agreement” means this Issuing and Paying Agent Agreement, as it may from time to time be supplemented, modified or amended in accordance with the provisions hereof. “Alternate Facility” means a letter of credit or another credit or liquidity facility enabling the Commission to request drawings or advances thereunder , on the terms and conditions to the Commission no less favorable than the terms of the Letter of Credit and the Reimbursement Agreement, an amount equal to the principal amount of the Commercial Paper Notes (plus an amount equal to the interest on such principal amount ), which may be outstanding under this Agreement.

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“Authenticating Agent” means, with respect to the Commercial Paper Notes, the Issuing and Paying Agent or each person or entity, if any, designated as such by the Commission, and it s successors and assigns and any other person or entity which may at any time be substituted for it pursuant thereto. “Available Moneys” means moneys which are continuously on deposit with the Issuing and Paying Agent for the sole benefit of the holders of the Commercial Paper Notes in a separate and segregated account in which only Available Moneys are held, which moneys constitute proceeds of (i) the Commercial Paper Notes received contemporaneously with the initial issuance and sale of the Commercial Paper Notes, (ii) a Drawing under the Letter of Credit or payments otherwise made under an Alternate Facility, (iii) refunding obligations for which the Issuing and Paying Agent has received a written opinion of nationally recognized counsel experienced in bankruptcy matters and acceptable to the Issuing and Paying Agent to the effect that payment of such moneys to the holders of the Commercial Paper Notes would not constitute an avoidable preference under Section 547 of the United States Bankruptcy Code if th e Commission were to become a debtor under the United States Bankruptcy Code or (iv) the investment of funds qualifying as Available Moneys under the foregoing clauses.
“Available Water Enterprise Revenues” means all of the moneys in the Revenue Fund (as defined in the Water Bonds Indenture and comprised primarily of Water Enterprise Revenues and earnings thereon) remaining after (i) the payments required by Subsections 5.01(b)(1), (2), (3) and (4) and Subsections 5.02(a), (b) and (c), but prior to the tran sfers required by Subsections 5.01(b)(5) and Section 5.01(b)(6) of the Water Bonds Indenture and (ii) all amounts required to be paid under any other indenture or resolution of the Commission for principal, interest, reserve fund and any other debt service requirements on other Water Bonds and Subordinated Water Bonds of the Commission as the same become due and payable.
“Bank” means PNC Bank, National Association , which is issuing the Letter of Credit, or any other entity that provides an Alternate Facilit y then outstanding and effective hereunder. “Bank Note” means a note or notes issued by the Commission pursuant to Section 4.01 hereof and evidencing all or any portion of any Unpaid Drawing and Advances made by the Bank. Bank Notes payable from Available Water Enterprise Revenues shall be designated as “San Francisco Public Utilities Commission Bank Note, (Water Series, Tax Exempt Subseries A-4 and Taxable Subseries A-4-T – PNC Bank, National Association ),” initially.
“Bank Note Debt Service Account” mean s the Bank Note Debt Service Account established within the Debt Service Fund pursuant to Section 3.01(b) hereof. “Bank Note Payment Date” means a date on which principal of or interest on a Bank Note is due and payable, including both scheduled principal and interest and principal and interest payable upon prepayment of a Bank Note.
“Bank Payment Account” means the Bank Payment Account established within the Debt Service Fund pursuant to Section 3.01(b) hereof.
“Bank Rate” shall have the meaning assigned t o that term in the Reimbursement Agreement. “Beneficial Owner” means a person who has a beneficial ownership interest in the Commercial Paper Notes purchased through a participant in the book-entry system of Cede & Co., as nominee of The Depository Trust Company, or its registered assigns.

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“Bond Counsel” means counsel selected by the City with nationally recognized expertise in municipal finance law, including matters related to the validity and tax-exempt status of interest on obligations of states and their political subdivisions. “Bonds” means Water Bonds and Subordinated Water Bonds. “Business Day” means any day other than (i) a Saturday, Sunday or day on which banking institutions in the State of California or the State of New York are authorized or obligated by law or executive order to be closed; (ii) a day upon which commercial banks in the State of California or the State of New York are authorized or obligated by law or executive order to be closed; (iii) a day on which the New York Stock Exchange is closed, or (iv) a legal holiday of the City or any other day the City is authorized by law to be closed for official business, as provided in the Reimbursement Agreement, as updated by the City from time to time, by presentation of your written and completed certificate signed as provided in the Letter of Credit.
“Charter” means the Charter of the City and County of San Francisco, as amended and supplemented from time to time, and any new or successor Charter. “City” means the City and C ounty of San Francisco, a charter city and municipal corporation organized and existing under and by virtue of the Constitution and laws of the State of California and the Charter and any public body hereafter created which shall be a successor thereto. “City Treasurer” means the duly elected and acting City Treasurer of the City. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and procedures promulgated thereunder or under the Internal Revenue Code of 1954, as amended. “Commission” means the Public Utilities Commission of the City and County of San Francisco duly constituted under the Charter, and all commissions, agencies or public bodies hereafter created which shall succeed to or take over the powers and duties of the Commission. “Commercial Paper Notes” means the Public Utilities Commission of the City and County of San Francisco Commercial Paper Note (Water Series, Proposition E) Tax-Exempt Subseries A-4, in the form set forth in Exhibit A-1 hereto, and the Public Utilities Commission of the City and County of San Francisco Commercial Paper Note (Water Series, Proposition E) Taxable Subseries A-4-T, in the form set forth in Exhibit A-2 hereto.
“Construction Fund” means the Fund by that name established pursuant to Section 3.01(a) hereof. “Controller” means the duly appointed and acting Controller of the City and includes any deputy acting for the Controller.
“Cost” shall mean, with respect to any Water Enterprise Projects, all costs and expenses of planning, designing, acquiring, constructing, installing and financing any Water Enterprise Projects, and obtaining governmental approvals, certificates, permits and licenses with respect thereto. The term Cost shall include, but shall not be limited to:
(i) Costs of preliminary investigation and development, the performance or acquisition of feasibility and planning studies, and the securing of regulatory approvals, as well as costs for the acquisition of land and interest therein, engineering and contractors’ fees, labor,

5 4904 -3278 -7975.5
materials, equipment, utility services and supplies, legal fees, fees incurred pursuant to any lending or credit facility or agreement, and financing expenses. (ii) Interest accruing in whole or in part on Commercial Paper Notes prior to and during the acquisition and implementation of any Water Enterprise Projects or any portion thereof, and for such additional period as the Commission may approve. (iii) The deposit or deposits from the proceeds of the Commercial Paper Notes in any fund or account required by this Agreement.
(iv) The payment of principal and interest, if any, when due of any Commercial Paper Note or other evidence of indebtedness the proceeds of which were applied to any of the costs of any Water Enterprise Projects described herein.
(v) Training and testing costs which are properly allocable to the acquisition, and implementation of any Water Enterprise Projects or any portion thereof. (vi) All costs of insurance applicable to the period of acquisition and implementation of any Water Enterprise Projects or any portion thereof. (vii) All costs relating to injury and damage claims arising out of the acquisition or implementation of any Water Enterprise Projects less available proceeds of insurance. (viii) Legally required or permitted federal, state and local taxes and payment s in lieu of taxes allocable for the acquisition or implementation of any Water Enterprise Projects. (ix) All costs of issuance for the Commercial Paper Notes, including the costs of the Reimbursement Agreement or the Dealer Agreements.
(x) Amounts due the United S tates of America as rebate of investment earnings with respect to the proceeds of the Commercial Paper Notes or as penalties in lieu thereof. (xi) The costs associated with the removal from service or reduction in service of any facilities as a result of the im plementation of any Water Enterprise Projects. (xii) All other costs incurred by the Commission and properly allocable to the acquisition or implementation of any Water Enterprise Projects or any portion thereof. “Dealer” means the dealer or dealers selected from time to time by the Commission to market the Commercial Paper Notes pursuant to the terms of any applicable Dealer Agreement and any successors or assigns thereto.
“Dealer Agreement” means each Dealer Agreement with a Dealer, and any and all modification s, alterations, amendments and supplements thereto, or any other dealer agreement entered into by the Commission and a Dealer with respect to the Commercial Paper Notes. “Debt Service Account ” means the Debt Service Account established within the Debt Service Fund pursuant to Section 3.01(b) hereof.
“Debt Service Fund” means the Fund by that name established pursuant to Section 3.01(b) hereof.

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“Designated Representatives” means the General Manager of the Commission and those additional individuals designated by the General Manager to complete and deliver Issuance Requests and who have been identified and whose signatures have been certified in a certificate of a Designated Representative of the Commission, the form of which is attached hereto as Exhibit C delivered to the Issuing and Paying Agent.
“Director of Public Finance” means the Director of Public Finance of the City or such other officer of the City which may assume responsibility for management of the debt or other similar obligations of the City or any duly authorized designee of the Director of Public Finance or such other officer. “Drawing” means any Principal Drawing or any Interest Drawing under the Letter of Credit. “DTC” means The Depository Trust Company, New York, New York. “Event of Default” means an Event of Default described in Section 8.01 hereof. “Expiration Date” means the date of expiration or termination of the Letter of Credit or any Alternate Facility then in effect.
“Final Drawing Notice” shall have the meaning assigned to that term in the Reimbursement Agreement.
“Fiscal Year” means the twelve (12) month period commencing on July 1 of each year and ending on the following June 30 or any other period of twelve (12) consecutive months adopted by the Commission as its fiscal year.
“Funds and Accounts ” means the funds and accounts (other than the Rebate Fund) established and maintained pursuant to this Agreement with respect to Available Water Enterprise Revenues. “Government Certificates” means evidences of indebtedness or ownership of proportionate interests in future principal and interest payments of Government Obligations, including depository receipts thereof, wherein (i) a bank or trust company acts as custodian and holds the underlying Government Obligations; (ii) the owner of the Government Certificate is a real party in interest with the right to proceed directly and individually against the obligor of the underlying Government Obligations; and (iii) the underlying Government Obligations are held in trust in a special account , segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian or any person claiming through the custodian, or any person to whom the custodian may be obligated. “Government Obligations” mean direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury) or evidence of ownership in a portion thereof (which may consist of specified portions of interest thereon and obligations of the Resolution Funding Corporation which constitute interest strips) if held by a custodian on behalf of the Issuing and Paying Agent, obligations the principal and interest on which are unconditionally guaranteed by the United States of America, and prerefunded municipal obligations rated in the highest rating category by Moody’s and S&P.
“Holder” or “Commercial Paper Noteholder” means any person who is in possession of any Commercial Paper Note drawn, issued or endorsed to such person or to the order of such person or to bearer or in blank in the case of a Commercial Paper Note in bearer form or the registered owner of a Commercial Paper Note in the case of a Commercial Paper Note in registered form.

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“Interest Drawing” means a drawing to pay interest on Commercial Paper Notes under the Letter of Credit in accordance with the Letter of Credit.
“Interest Portion” means an amount equal to the product of twelve percent (12%) per annum for a period of 270 days and on the basis of a year of 360 days and the Principal Portion to be funded with the proceeds of an Interest Drawing under the Letter of Credit . “Issuance Request” means a request made by the Commission, acting through a Designated Representative, to the Issuing and Paying Agent for the delivery of a Commercial Paper Note or Commercial Paper Notes, the form of which is attached hereto as Exhibit D. The Controller of the City and County of San Francisco shall, throughout the term of this Issuing and Paying Agent Agreement, be authorized to submit Issuance Requests to the Issuing and Paying Agent notwithstanding any provision hereof, or future amendment hereof, to the contrary.
“Issuing and Paying Agent” means U.S. Bank Trust Company, National Association, or any successor or assigns permitted under this Agreement or any other Issuing and Paying Agent which is appointed by the Commission and has entered into an Issuing and Paying Agent Agreement. “Issuing and Paying Agent Agreement” means this Issuing and Paying Agent Agreement, dated as of February 1, 2025, between the Commission and the Issuing and Paying Agent, and any and all modifications, alterations, amendments and supplements thereto. “Letter of Credit” means the irrevocable direct pay letter of credit issued by the Bank pursuant to the Reimbursement Agreement for the account of the Commission in favor of the Issuing and Paying Agent, as beneficiary, and any Alternate Facility accepted by the Issuing and Paying Agent as provided in Section 9.02 hereof.
“Maximum Interest Rate” means (i) with respect to the Commercial Paper Notes, the lesser of (a) maximum non -usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum and (ii) with respect to Bank Notes, the maximum non-usurious interest rate that may, under applicable federal law and applicable state law, be contracted for, charged or received under such laws. “No-Issuance Notice” shall have the meaning assigned thereto in the Reimbursem ent Agreement. “Nominee” means the nominee of the Note Depository as determined from time to time in accordance with Section 2.05 hereof.
“Note Depository” means the securities depository for the Commercial Paper Notes appointed as such pursuant to Section 2.05 hereof, and its successors and assigns. “Note Proceeds” means proceeds of the sale of the Commercial Paper Notes or any moneys, securities or other obligations that may be deemed to be proceeds of the Commercial Paper Notes within the meaning of the Code.
“Ordinances” means Ordinance No. 203-98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, to establish a procedure for the Commission to issue commercial paper notes, and Ordinance No. 269-24, adopted on November 19, 2024 by the Board and signed by the Mayor on November 25, 2024.

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“Outstanding” when used as of a particular time with reference to Commercial Paper Notes, means all Commercial Paper Notes delivered hereunder except:
(a) Commercial Paper Notes cancelled by the Issuing and Paying Agent or surrendered to the Issuing and Paying Agent for cancellation;
(b) Commercial Paper Notes that are paid or deemed to be paid within the meaning of Section 9.05 hereof; and
(c) Commercial Paper Notes in lieu of or in substitution for which replacement Commercial Paper Notes shall have been issued by the Commission and delivered by the Issuing and Paying Agen t hereunder.
“Parity Notes” means commercial paper notes or other short -term indebtedness payable from or secured by Available Water Enterprise Revenues.
“Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Note Depository holds Commercial Paper Notes as depository. “Paying Agent” means, with respect to the Commercial Paper Notes, the Issuing and Paying Agent or each person or entity, if any, designated as such by the Commission herein, and its successors and assigns and any other person or entity which may at any time be substituted for it pursuant thereto. “Principal Drawing” means a drawing to pay principal of Commercial Paper Notes under the Letter of Credit in accordance with the Letter of Credit. “Principal Office” means the office of the Issuing and Paying Agent thereof designated in writing to the Commission.
“Principal Portion” means the maximum principal amount of the Commercial Paper Notes which may be funded with the proceeds of a Principal Drawing or Drawings under the Letter of Credit. “Qualified Investments” mean, if and to the extent permitted by law and by any policy guidelines promulgated by the City:
(a) Government Obligations or Government Certificates;
(b) Certificates, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):
(i) Farmers Home Administration (FmHA) – Certificates of beneficial ownership;
(ii) Federal Housing Administration Debentures (FHA);
(iii) General Services Administration – Participation certificates; (iv) Government National Mortgage Associat ion (GNMA or “Ginnie Mae”) – guaranteed mortgage backed bonds and GNMA guaranteed pass-through obligations (participation certificates);

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(v) U.S. Maritime Administration – Guaranteed Title XI financing; (vi) U.S. Department of Housing and Urban Development (HUD) – Project notes and local authority bonds; and
(vii) Any other agency or instrumentality of the United States of America; (c) Certificates, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit United States of America government agencies (stripped securities are only permitted if they have been stripped by the agency itself):
(i) Federal Home Loan Bank System - Senior debt obligations (consolidated debt obligations);
(ii) Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) – Participation certificates (mortgage-backed securities) and senior debt obligations; (iii) Federal National Mortgage Association (FNMA or “Fannie Mae”) – mortgage-backed securities and senior debt obligations (excluding stripped mortgage securities which are valued greater than par on the portion of the unpaid principal); (iv) Student Loan Marketing Association (SLMA or “Sallie Mae”) – Senior debt obligations;
(v) Resolution Funding Corp. (REFCORP) – Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form;
(vi) Federal Farm Credit System – Consolidated systemwide bonds and notes; and
(vii) Any other agency or instrumentality of the United States of America; (d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of “AAAm-G” or “AAAm” and by Moody’s of “Aaa”;
(e) Certificates of deposit issued by a state or national bank or a state or federal savings and loan; provided that such certificates of deposit shall be either (i) continuously and fully insured by the FDIC; or (ii) have a maturity of not greater than 365 days and have the highest short -term letter and numerical ratings of Moody’s and S&P;
(f) Savings accounts or money market deposits that are fully insured by FDIC; (g) Investment Agreements, including guaranteed investment contract s, provided either (i) the long-term unsecured debt or claims ability of the issuer or guarantor thereof is rated in the highest rating category by Moody’s and S&P, or (ii) such agreement is fully collateralized by Government Obligations or Government Cert ificates;

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(h) Commercial paper of “prime” quality rated in the highest rating category by Moody’s and S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States;
(i) Certificates or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest long-term rating categories assigned by such agencies; (j) Federal funds or banker’s acceptances which are eligible for purchases by members of the Federal Reserve System, drawn on any bank the short -term obligations of which are rated in the highest rating category by Moody’s and S&P; provided that the maturity cannot exceed 270 days;
(k) Repurchase agreements with maturities of either (a) 30 days or less, or (b) less than one year, provided that the collateral is marked-to -market daily, entered into with financial institutions such as banks or trust companies organized under state or federal law, insurance companies, or government bond dealers reporting to, or trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of SPIC, or with a dealer or parent holding company that is rated “A” or better by S&P or “P-1” or better by Moody’s. The repurchase agreement must be in respect of Government Obligations or Government Certificates or obligations described in paragraph (b) herein, which, exclusive of accrued interest, shall be maintained at least 100% of par. In addition, repurchase agreements shall meet the following criteria: (i) the third party (who shall not be the provider of the collateral) has possession of the repurchase securities and the Government Obligations or Government Certificates; (ii) failure to maintain the requisite collateral levels shall require liquidation; and (iii) the third party having possession of the securities has a perfected, first priority security interest in the securities; and (l) Any other debt or fixed income security specified by the City (except securities of the City and any agency, department, commission or instrumentality thereof) and rated in the highest rating category by Moody’s and S&P, including prerefunded municipal obligations. “Rating Agencies” means Moody’s or Standard & Poor’s, or such other rating agency designated by the Commission, and approved by the Bank (which approval shall not be unreasonably withheld), maintaining a rating on the Commercial Paper Notes. For purposes of this definition: the term “Moody’s” means Moody’s Investor’s Service, and its successors and assigns, or if such organization no longer maintains a rating on the Commercial Paper Notes, any other rating agency designated by the Commission, with the approval of the Bank (which approval shall not be unreasonably withheld); and the term “Standard & Poor’s” or “S&P” means S&P Global Ratings, and its successors and assigns, or if such organization no longer maintains a rating on the Commercial Paper Notes, any other rating agency designated by the Commission, with the approval of the Bank (which approval shall not be unreasonably withheld). “Ratings” means any rating by a Rating Agency assigned to a Water Bond. “Rebate Fund” means the Fund by that name established pursuant to Section 5.02 hereof. “Registrar” means, with respect to the Commercial Paper Notes, the Issuing and Paying Agent or such other additional person or entity, if any, designated as such by the Commission herein authorizing the issuance of the Commercial Paper Notes, and its successors and assigns and any other person or entity which may at any time be substituted for it pursuant thereto. “Reimbursement Agreement” means the Reimbursement Agreement, dated as of February 1, 2025, between the Commission and the Bank, and the related fee letter between the Commission and the

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Bank, each as amended, supplemented, and modified from time to time, in accordance with the provisions thereof, and any similar document entered into with respect to an Alternate Facility. “Stated Amount” means the Stated Amount as set forth in the Letter of Credit. “Subordinated Water Bonds” means any obligations or securities of the Commission hereafter issued pursuant to a Subordinated Water Bonds Indenture. “Subordinated Water Bonds Indenture ” means any indenture of the Commission providing for the issuance of indebtedness secured in whole or in part by a lien on Water Enterprise Revenues subordinate to the lien of the Water Bonds Indenture in favor of the Water Bonds but superior to the lien in favor of the Commercial Paper Notes.
“Subseries” means any of the Commercial Paper Notes designated as being of the same subseries. “Subseries A-4 Notes” means the Public Utilities Commission of the City and County of San Francisco (Water Series, Proposition E), Tax-Exempt Subseries A-4, authorized by, and at any time Outstanding under this Agreement.
“Subseries A-4-T Notes” means the Public Utilities Commission of the City and County of San Francisco (Water Series, Proposition E), Taxable Subseries A-4-T, authorized by, and at any time Outstanding under this Agreement.
“Supplemental Agreement” means any Sup plemental Agreement authorized by Section 9.01 hereof.
“Tax Certificate” means the Tax Certificate, dated as of its date concerning certain matters pertaining to the use and investment of proceeds of the Tax-Exempt Commercial Paper Notes, executed by the C ommission on the date of issuance of the Commercial Paper Notes, including any and all exhibits attached thereto.
“Tax-Exempt Commercial Paper Notes” means the Subseries A-4 Notes. “Taxable Commercial Paper Notes” means the Subseries A-4-T Notes. “Termination Date” means the stated expiration date established pursuant to the Letter of Credit. “Unpaid Drawing” means a Drawing on the Letter of Credit for which the Bank has not been reimbursed by the Commission in accordance with the Reimbursement Agreement. “Water Bonds” means all obligations and securities of the Commission issued pursuant to the Water Bonds Indenture.
“Water Bonds Indenture” means that certain Amended and Restated Indenture, dated as of August 1, 2002, by and between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee thereunder, providing for the issuance from time to time of Water Bonds, as amended, and as the same may be subsequently supplemented, amended and modified from time to time.
“Water Enterprise” means the San Francisco Water Enterprise, an enterprise of the City under the jurisdiction of the Commission pursuant to Charter Section 4.112.

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“Water Enterprise Projects” means any u ndertaking, facility or item which is authorized under the Ordinances and described in a Tax Certificate, which has been determined by the Commission to be financed or refinanced in whole or in part with the proceeds of the Commercial Paper Notes. “Water Enterprise Revenues” shall have the meaning ascribed to the term “Revenues” in the Water Bonds Indenture.

Section 1.02. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate.
(b) The words “hereof,” “herein,” “hereto,” “hereby” and “hereunder” refer to this entire Agreement.
(c) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.

Section 1.03. Agreement to Constitute Contract. In consideration of the purchase and acceptance of any or all of the Commercial Paper Notes by those who shall own the same from time to time, the provisions of this Agreement shall be part of the contract of the Commission with Holders of the Commercial Paper Notes, and shall be deemed to be and shall constitute contracts between the Commission, the Issuing and Paying Agent and the Holders from time to time of the Commercial Paper Notes.

ARTICLE II

GENERAL AUTHORIZATION AND ISSUANCE;

THE COMMERCIAL PAPER NOTES
Section 2.01. Authorized Amount of Commercial Paper Notes; Terms and Description of Commercial Paper Notes.
(a) No Commercial Paper Notes may be issued under the provisions of this Agreement except in accordance with this Article II.
(b) The Commission hereby authorizes the issuance of its “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-4” (the “Subseries A-4 Notes”) and its “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Taxable Subseries A-4-T” (the “Subseries A-4-T Notes” and, together with the Subseries A-4 Notes, the “Commercial Paper Notes”) in order to provide interim financing for the Cost of any Water Ent erprise Projects, subject to the provisions of this Section 2.01 and as hereinafter provided. The Commercial Paper Notes shall be issued from time to time pursuant to the Commission’s direction as provided herein to finance and refinance the Cost of Water Enterprise Projects. Proceeds of Commercial Paper Notes issued to refinance other Commercial Paper Notes may be used to pay or reimburse the Bank for Drawings used to pay principal or interest due on such maturing Commercial Paper Notes. The authorizati on hereunder specifically includes the authorization to issue and reissue Commercial Paper Notes for the purposes

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contemplated herein . The aggregate principal amount of Commercial Paper Notes that may be Outstanding at any one time hereunder shall not at any time exceed the lesser of (i) $150,000,000 or (ii) the Principal Portion then available under the Letter of Credit. At no time shall the aggregate amount of interest payable on the Outstanding Commercial Paper Notes exceed the Interest Portion then av ailable under the Letter of Credit.
(c) The Commercial Paper Notes shall be dated the date of their respective authentication and issuance; shall be issued in bearer or registered form, as shall be determined by the General Manager of the Commission, shall be issued in denominations of $100,000 and in integral multiples of $1,000 in excess thereof; and interest on the Commercial Paper Notes shall be separately stated by rate and amount on the face of each Commercial Paper Note. Commercial Paper Notes shall bear interest from their respective dates, payable on their respective maturity dates.
(d) The Commercial Paper Notes (i) shall bear interest payable at maturity at an annual rate (calculated, in the case of the Tax -Exempt Commercial Paper Notes, on the basis of the actual number of days elapsed and a year consisting of 365 or 366 days, as applicable, and, in the case of the Taxable Commercial Paper Notes, on the basis of the actual number of days elapsed and a year consisting of 360 days), which shall not in any event exceed the Maximum Interest Rate (ii) shall mature on a Business Day not more than 270 days after their respective dates, but in no event later than the Business Day immediately preceding the Termination Date, and (iii) shall be sold by a Dealer pursuant to a Dealer Agreement at a price of not less than 100% of the principal amount thereof. The stated interest rate, maturity date and other terms of each Commercial Paper Note, shall be as set forth in the Issuance Request required by Section 2.06 hereof directing the issuance of such Commercial Paper Note. At no time may the aggregate amount of interest payable on the Commercial Paper Notes exceed the Interest Portion then available under the Letter of Credit . The Commission warrants that each Issuan ce Request will be consistent with the terms of this Agreement.
(e) The Commercial Paper Notes shall not be subject to redemption prior to maturity. (f) The Commercial Paper Notes shall be numbered in such manner as the Issuing and Paying Agent may deem appropriat e.

Section 2.02. Payment. The Commission covenants to duly and punctually pay or cause to be paid from proceeds of Drawings made on the Letter of Credit in accordance with this Agreement, the principal of and interest on each and every Commercial Paper Note when due, whether at maturity or immediately upon acceleration or because the Issuing and Paying Agent has received a Final Drawing Notice. The Issuing and Paying Agent is authorized and directed to use amounts paid by the Commission to reimburse the Bank for each Drawing made on the Letter of Credit in accordance with Section 3.04 hereof. The principal of and interest on the Commercial Paper Notes shall be paid in federal or other immediately available funds in such coin or currency of the United States of America as, at the respective times of payment, is legal tender for the payment of public and private debts. To the extent Drawings made on the Letter of Credit for the purpose of paying principal of and interest on maturing or accelerated Commercial Paper Notes, or on Commercial Paper Notes with respect to which the Issuing and Paying Agent has received a Final Drawing Notice, together with Note Proceeds from Commercial Paper Notes issued on such date, are insufficient to pay principal of and interest on maturing or accelerated Commercial Paper Notes, or on Commercial Paper Notes with respect to which the Issuing and Paying Agent has received a Final Drawing Notice, the Issuing and Paying Agent shall promptly notify the General Manager of the Commission who shall cause the Commission to make all payments of interest and principal directly to the Issuing and Paying Agent in immediately available funds on or prior to 1:30 p.m., New York City

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time, on the date payment is due on any Commercial Paper Note, whether at maturity or upon acceleration or because the Issuing and Paying Agent has received a Final Drawing Notice.

The principal of and the interest on the Commercial Paper Notes shall be payable at the Principal Office of the Issuing and Paying Agent on or before the close of business on any Business Day upon which such Commercial Paper Notes have become due and payable, whether at maturity or upon acceleration or because the Issuing and Paying Agent has received a Final Drawing Notice, provided that such Commerci al Paper Notes are presented and surrendered on a timely basis. Upon presentation of such a Commercial Paper Note to the Issuing and Paying Agent no later than 9:00 a.m . (New York City time) on a Business Day, payment for such Commercial Paper Note shall be made by the Issuing and Paying Agent in immediately available funds on such Business Day. If a Commercial Paper Note is presented for payment after 9:00 a.m. (New York City time) on a Business Day, payment therefor may be made by the Issuing and Paying Agent on the next succeeding Business Day without the accrual of additional interest thereon.

Notwithstanding the provisions of the previous paragraph, in the event the Commercial Paper Notes are issued as a master note or master notes in book-entry form, they shall be payable at maturity without physical presentation or surrender in accordance with the procedures of the Note Depository. The Issuing and Paying Agent shall pay the principal and interest on a book-entry commercial paper note to the Note Depository in immediately available funds, which payment shall be by net settlement of the Issuing and Paying Agent’s account at the Note Depository. The Issuing and Paying Agent shall have no obligation under the Agreement to make any payment for which there is not sufficient, available and collected funds in the applicable account, and the Issuing and Paying Agent may, without liability to the Commission, refuse to pay any Commercial Paper Note that would result in an overdraft to such account.

Section 2.03. Authentication of Commercial Paper Notes. The Issuing and Paying Agent is by this Agreement designated by the Commission as an Authenticating Agent, Registrar and Paying Agent for the Commercial Paper Notes and shall perform such duties in such capacity in accordance with the terms of this Agreement; provided however, the Issuing and Paying Agent when acting hereunder as the Authenticating Agent, Registrar or Paying Agent shall be afforded the same protections provided to the Issuing and Paying Agent hereunder as if each such provision affording protection to the Issuing and Paying Agent explicitly referred to the Authenticating Agent, Registrar and Paying Agent . Notwithstanding anything herein to the contrary, the Issuing and Paying Agent shall not (i) authen ticate Commercial Paper Notes which mature later than the Business Day immediately preceding the Termination Date, (ii) authenticate Commercial Paper Notes if (a) an Event of Default then exists of which it has been given written notice of or (b) after the Issuing and Paying Agent has received a No-Issuance Notice, Acceleration Notice or a Final Drawing Notice, which No-Issuance Notice, Acceleration Notice or Final Drawing Notice has not been withdrawn or rescinded by the Bank.

If any Commercial Paper Notes are to be issued in bearer form, the Commission shall from time to time furnish the Issuing and Paying Agent with an adequate supply of Commercial Paper Notes, each of which shall have attached such number of carbon copies as the Issuing and Paying Agent shall reasonably specify. When any Commercial Paper Notes are delivered to the Issuing and Paying Agent by the Commission, the Issuing and Paying Agent shall execute and deliver to the Commission a receipt therefor and shall hold such Commercial Paper Not es for the account of the Commission in safekeeping in accordance with its customary practice.

Section 2.04. Form of Commercial Paper Notes and Authentication Certificate. The definitive Commercial Paper Notes and the Certificate of Authentication endorsed thereon sh all be substantially in the forms set forth in Exhibits A-1 and A-2 hereto and made a part hereof, with such appropriate variations, omissions and insertions as shall be required or appropriate in order to designate the Subseries thereof and to accomplish the purpose of the transactions authorized by this Agreement . In the event a subseries of the

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Commercial Paper Notes is issued in book entry form its aggregate face amount shall be represented by a master note (each, a “Master Note”) in the form of Exhibit B -1 or Exhibit B-2, as applicable, executed by the Commission pursuant to the book-entry commercial paper program of the Note Depository. The Issuing and Paying Agent shall maintain such Master Note in safekeeping, in accordance with its customary practices, on behalf of Cede & Co., the registered owner thereof and nominee of DTC. As long as Cede & Co. is the registered owner of such Master Note, the beneficial ownership interest therein shall be shown on, and the transfer of ownership thereof shall be effected through, entries on the books maintained by DTC and the books of its direct and indirect participants. The Master Notes and the book-entry notes shall be subject to DTC’s rules and procedures, as amended from time to time. The Issuing and Paying Agent shall not be liable or responsible for sending transaction statements of any kind to DTC’s participants or the beneficial owners of the Book-Entry Notes, or for maintaining, supervising or reviewing the records of DTC or its participants with respect to such Notes.

The Commercial Paper Notes may have endorsed thereon such legends or text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law or regulation with respect thereto.

Section 2.05. Book-Entry System. Unless the General Manager of the Commission or his or her designee directs the Issuing and Paying Agent to issue Commercial Paper Notes in bearer form or registered form other than in book-entry form, the Commercial Paper Notes shall initially be issued in book-entry form as further provided in this Section 2.05.
(a) The Commercial Paper Notes issued pursuant to this Agreement shall initially be issued in the form of a separate single fully-registered Note. Except as provided in subsection (c) of this Section 2.05, all of the Commercial Paper Notes shall be registered in the name of the Nominee. Notwithstanding any provision to the contrary in Section 2.06, so long as the Commercial Paper Notes remain in the form of one or more master notes in book-entry form, the issuance of Notes pursuant to an Issuance Request against payment therefor shall not require the physical delivery of note certificates.

The Issuing and Paying Agent and the Commission may treat the registered owner of each Commercial Paper Note as the sole and exclusive owner thereof for the purposes of payment of the principal of or interest on the Commercial Paper Notes, giving any notice permitted or required to be given to Commercial Paper Noteholders u nder this Agreement, registering the transfer of Commercial Paper Notes, obtaining any consent or other action to be taken by Commercial Paper Noteholders, and for all other purposes whatsoever, and neither the Issuing and Paying Agent nor the Commission shall be affected by any notice to the contrary.

Neither the Issuing and Paying Agent nor the Commission shall have any responsibility or obligation to any participant in the Note Depository (a “Participant”), any person claiming a beneficial ownership interest in the Commercial Paper Notes under or through the Note Depository or any Participant, or any other person who is not shown on the registration books as being a Commercial Paper Noteholder, with respect to (i) the accuracy of any records maintained by the Note Depository or any Participant; (ii) the payment by the Note Depository or any Participant of any amount in respect of the principal of or interest on the Commercial Paper Notes; (iii) the delivery of any notice which is permitted or required to be given to Commercial Paper Noteholders under this Agreement; (iv) any consent given or other action taken by the Note Depository as Commercial Paper Noteholder; or (v) any other purpose.

The Issuing and Paying Agent shall pay all principal of and interest on the Commercial Paper Notes only to or upon the order of the Note Depository, and all such payments shall be valid

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and effective to fully satisfy and discharge the Commission’s obligations with respect to the payment of the principal of an d interest on the Commercial Paper Notes to the extent of the sum or sums so paid. Upon delivery by the Note Depository to the Issuing and Paying Agent of written notice to the effect that the Note Depository has determined to substitute a new Nominee in place of the current Nominee, and subject to the provisions herein with respect to record dates, the word Nominee in this Article II shall refer to such new Nominee. (b) In order to qualify the Commercial Paper Notes for the Note Depository’s Book-Entry System , the appropriate officers or employees of the Commission are hereby authorized and directed to execute, seal, countersign and deliver, with a copy to the Issuing and Paying Agent, on behalf of the Commission to the Note Depository for the Commercial Paper Notes, a Letter of Representation from the Commission representing such matters as shall be necessary to so qualify the Commercial Paper Notes. The execution and delivery of the Letter of Representation shall not in any way limit the provisions of this S ection 2.05 or in any other way impose upon the Commission any obligation whatsoever with respect to persons having beneficial ownership interests in the Commercial Paper Notes other than the Commercial Paper Noteholders. (c) In the event (i) the Note Depository determines not to continue to act as securities depository for Commercial Paper Notes, or (ii) the Commission determines that the Note Depository shall no longer so act and delivers a written certificate to the Issuing and Paying Agent to that effect, t hen the Commission will discontinue the Book-Entry System with the Note Depository for such Commercial Paper Notes. If the Commission determines to replace the Note Depository for the Commercial Paper Notes with another qualified securities depository, the Commission shall prepare or direct the preparation of a new, single, separate, fully registered Commercial Paper Note for such Commercial Paper Notes registered in the name of such successor or substitute qualified Note Depository or its Nominee, or make such other arrangements acceptable to the Issuing and Paying Agent and such successor or substitute Note Depository as are not inconsistent with the terms of this Agreement . If the Commission fails to identify another qualified Note Depository to replace the incumbent Note Depository for the Commercial Paper Notes, then such Commercial Paper Notes shall no longer be restricted to being registered in the bond registration books in the name of the incumbent Note Depository or its Nominee, but shall be registered in whatever name or names the incumbent Note Depository or its Nominee transferring or exchanging such Commercial Paper Notes shall designate. (d) Notwithstanding any provision of this Agreement to the contrary, so long as the Commercial Paper Notes are registered in the name of the Nominee, all payments with respect to principal of and interest on the Commercial Paper Notes and all notices with respect to the Commercial Paper Notes shall be made and given, respectively, as provided in the Letter of Representation or as otherwise instructed by the Note Depository. (e) The initial Note Depository with respect to the Commercial Paper Notes shall be the Depository Trust Company (“DTC”). The initial Nominee with respect to the Commercial Paper Notes shall be Cede & Co., as nominee of DTC.
(f) Upon receipt of an Issuance Request from the Commission with respect to book- entry Commercial Paper Notes, the Issuing and Paying Agent shall transmit such instructions to Note Depository and direct Note Depository to cause appropriate entries of the Book-Entry Notes to be made in accordance with Note Depository’s applicable rules, regulations and procedures for book-entry commercial paper programs. The Issuing and Paying Agent shall assign CUSIP numbers to the Commission’s Commercial Paper Notes to identify the Commission’s aggregate principal amount of outstanding Commercial Paper Notes in Note Depository’s system, together

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with the aggregate unpaid interest (if any) on such Notes. Promptly following Note Depository’s established settlement time on each issuance date, The Issuing and Paying Agent shall access Note Depository’s system to verify whether settlement has occurred with respect to the Commission’s Commercial Paper Notes. The Issuing and Paying Agent shall have no liability to the Commission whatsoever if any Note Depository participant purchasing a Commercial Paper Note fails to settle or delays in settling its balance with Note Depository or if Note Depository or any Note Depository participant fails to perform in any respect.

Section 2.06. Conditions Precedent to Delivery of Commercial Paper Notes. (a) Prior to the issuance of the first Commercial Paper Notes hereunder, Commercial Paper Notes shall be executed by manual or facsimile signature of the General Manager of the Commission and countersigned by the Secretary of the Commission on behalf of the Commission and delivered to the Issuing and Paying Agent, who shall hold such Commercial Paper Notes unauthenticated in safekeeping for the Commission . Subject to the provisions of Sections 2.01 and

2.05 hereof and paragraphs (c) and (d) of this Section 2.06, at any time and from time to time prior to the Termination Date, Commercial Paper Notes shall be manually authenticated and delivered by the Issuing and Paying Agent for the con sideration and in the manner hereinafter provided, but only upon receipt by the Issuing and Paying Agent of an Issuance Request in the form attached hereto as Exhibit D or upon oral receipt by the Issuing and Paying Agent of information as set forth in Exh ibit D, no later than 10:00 a.m . (New York City time) on the Business Day on which Commercial Paper Notes are to be delivered, directing the Issuing and Paying Agent to authenticate the Commercial Paper Notes referred to therein and to deliver the same to or upon the order of a Dealer. Each Issuance Request shall include: (i) the subseries designation of each Commercial Paper Note to be delivered; (ii) the principal amount and date of each Commercial Paper Note then to be delivered; (iii) the rate and amount of interest thereon; (iv) the maturity date thereof; and (v) if the Commercial Paper Notes are sold at a premium, the purchase price of the Commercial Paper Notes. No later than 12:30 p.m. (New York City time) on each Business Day on which the Commission proposes to issue Commercial Paper Notes, each Dealer shall report to the Commission each transaction made with or arranged by it or shall notify the Commission and the Issuing and Paying Agent of the difference, if any, between the amount of maturing Notes and the amount of Notes which such Dealer has arranged to sell or has agreed in its sole discretion to purchase.

Subject to the provisions of Section 2.05 hereof, upon receipt of such Issuance Request (which may be (a) mailed, (b) telephoned, (c) tran smitted through an electronic instruction and reporting communication offered by the issuing and paying agent, and/or (d) transmitted by e-mail to the Issuing and Paying Agent), the Issuing and Paying Agent shall, by 2:15 p.m . (New York City time) on such day, complete each Commercial Paper Note then to be delivered as to amount, date, maturity date, interest rate and interest amount specified in such Issuance Request, and deliver each such Commercial Paper Note as set forth in the Issuance Request, which request shall be consistent with Section 2.01 hereof so that no such Commercial Paper Notes shall be delivered by the Issuing and Paying Agent if such delivery would result in the aggregate principal amount of Commercial Paper Notes Outstanding being in excess of (i) $150,000,000 or (ii) the Principal Portion then available under the Letter of Credit, or would result in the aggregate amount of interest payable to exceed the Interest Portion then available under the Letter of Credit. Notwithstanding any provision herein to the contrary, no such Commercial Paper Notes shall be delivered by the Issuing and Paying Agent if (A) it shall have received notice from a Designated Representative directing the Issuing and Paying Agent to cease authenticating and delivering Commercial Paper Notes until such time as such direction is withdrawn by similar notice, (B) it shall have received written notice that an Event of Default shall have occurred and be continuing, (C) with respect to the Tax-Exempt

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Commercial Paper Notes, it shall have received written notice from Bond Counsel that their opinion regarding the exclusion of interest on the Tax-Exempt Commercial Paper Notes from gross income for federal income tax purposes thereof is being withdrawn, (D) the maturity date of such Commercial Paper Notes would extend beyond the Business Day immediately preceding the Termination Date or (E) the Issuing and Paying Agent shall have received a No-Issuance Notice or a Final Drawing Notice. If an Issuance Request is received after 1:00 p.m . (New York City time) on a given day, the Issuing and Paying Agent shall not be obligated to deliver the requested Commercial Paper Notes until the next succeeding Business Day.

A copy of each Commercial Paper Note authenticated in bearer form by t he Issuing and Paying Agent shall be promptly mailed by U.S. mail, first class, postage prepaid, to the Commission by the Issuing and Paying Agent. The Issuing and Paying Agent shall furnish the Commission with such additional information with respect to the carrying out of its duties hereunder as the Commission from time to time shall reasonably request.
(b) The delivery of any Issuance Request described above in this Section 2.06, shall constitute the Commission’s representation and certification to the Issu ing and Paying Agent, upon which representation and certification the Issuing and Paying Agent may conclusively rely without inquiry or investigation, that, as of the date of delivery of such Commercial Paper Notes, (i) the Letter of Credit is in full force and effect; (ii) after the issuance of such Commercial Paper Notes and the application of the proceeds thereof, the aggregate principal amount of Commercial Paper Notes Outstanding will not exceed the amount that at the time is authorized to be Outstanding as provided in Section 2.01(b) hereof; (iii) the interest rates borne by the Commercial Paper Notes to be delivered on such date do not exceed the lesser of the Maximum Interest Rate or the rate used in calculating the applicable Interest Portion of the Letter of Credit; (iv) unless the Commercial Paper Notes to be issued are taxable, the facts, estimates, circumstances and representations set forth or made (as the case may be) in the Tax Certificate continue to exist and are reaffirmed on such date; (v) the terms of the Commercial Paper Notes do not exceed 270 days and the maturity dates of such Commercial Paper Notes set forth in the Issuance Request do not extend beyond the Business Day immediately preceding the Termination Date or the latest maturity date allowed by the Ordinances; (vi) the Commission has not been notified by Bond Counsel that their opinion with respect to the validity of the Commercial Paper Notes and the tax treatment of the interest on the Tax-Exempt Commercial Paper Notes delivered prior to the initial issuance of the Commercial Paper Notes has been revised or withdrawn or, if any such revisions or withdrawal has occurred, the revised opinion or a substitute opinion acceptable to the Dealers has been delivered; (vii) no Event of Default has occurred and is then continuing; (viii) the Commission has not received or been notified that the Bank has issued a No-Issuance Notice or a Final Drawing Notice; and (xi) all of the conditions precedent to the issuance of such Commercial Paper Not es, including the consent of the Director of Public Finance to the delivery of such Issuance Request, set forth in this Section

2.06 have been satisfied.
(c) Any Issuance Request made by telephone pursuant to this Section 2.06 may be recorded by the Issuing an d Paying Agent and confirmed promptly in writing by a Designated Representative. Except in the case of negligence or willful misconduct in connection with executing such instruction, the Issuing and Paying Agent shall incur no liability to the Commission in acting hereunder upon telephonic or other instructions contemplated hereby which the recipient thereof believed in good faith to have been given by a Designated Representative. In the event a discrepancy exists between the telephonic instructions and t he written confirmation, or in the absence of receiving a written confirmation, the telephonic instructions as understood by the Issuing and Paying Agent will be deemed the controlling instructions.

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(d) Prior to the initial delivery of the Commercial Paper Not es under this Agreement and as a condition to such initial issuance, the Commission shall be notified by the Issuing and Paying Agent that the Issuing and Paying Agent has received:
(i) A fully executed counterpart of the Reimbursement Agreement; (ii) The executed Letter of Credit;
(iii) fully executed copies of the Master Notes and the Letters of Representations; and
(iv) Fully executed counterparts of the Dealer Agreements. provided, however, except with respect to the Letter of Credit, the Issuing and Paying Agent may conclusively rely upon the direction of the Commission with respect of the implementation or application of any of the terms contained in any such documents.

Section 2.07. Commercial Paper Notes. The Commission and the Issuing and Paying Agent may deem and treat the bearer of Commercial Paper Notes in bearer form or the registered owner of Commercial Paper Notes in registered form as the absolute owner thereof (whether or not such Commercial Paper Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by anyone other than the Issuing and Paying Agent), for the purpose of receiving payment thereof or on account thereof and for all other purposes, and neither the Commission nor the Issuing and Paying Agent shall be affected by any notice to the contrary.

Section 2.08. Mutilated, Lost, Stolen or Destroyed Commercial Paper Notes. If any Commercial Paper Note shall become mutilated, the Commission, at the expense of the Holder of such Commercial Paper Note, shall execute or cause to be executed, and the Issuing and Paying Agent shall thereupon authenticate and deliver a new Commercial Paper Note of like tenor bearing a different number in exchange and substitution for the Commercial Paper Note so mutilated, but only upon surrender to the Issuing and Paying Agent of the Commercial Paper Note so mutilated. If any Commercial Paper Note shall be lost, destroyed or stolen, evidence of the ownership thereof, and of such loss, destruction or theft may be submitted to the Commission and the Issu ing and Paying Agent and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the Commission, at the expense of the Holder, shall execute, and the Issuing and Paying Agent shall thereupon authenticate and deliver a n ew Commercial Paper Note of like tenor and bearing a different number in lieu of and in substitution for Commercial Paper Note so lost, destroyed or stolen (or if any such Commercial Paper Note shall have matured or shall be about to mature, instead of issuing a substitute Commercial Paper Note, the Commission may direct the Issuing and Paying Agent to pay the same without surrender thereof). The Commission and Issuing and Paying Agent may require payment by the registered Holder of a Commercial Paper Note of a sum not exceeding the actual cost of preparing each new Commercial Paper Note executed and delivered pursuant to this paragraph and of the expenses which may be incurred by the Commission and the Issuing and Paying Agent. Any Commercial Paper Note executed and delivered under these provisions in lieu of any Commercial Paper Note alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Commission whether or not Commercial Paper Note so alleged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement with all other Commercial Paper Notes secured by this Agreement.

Section 2.09. Surrender of Commercial Paper Notes. All Commercial Paper Notes surrendered for payment or registration of transfer, if surrendered to any person other than the Issuing and Paying Agent, shall be delivered to the Issuing and Paying Agent and shall be promptly cancelled by it . The Commission

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may at any t ime deliver to the Issuing and Paying Agent for cancellation any Commercial Paper Notes previously authenticated and delivered hereunder which the Commission may have acquired in any manner whatsoever, and all Commercial Paper Notes so delivered shall prom ptly be cancelled by the Issuing and Paying Agent . No Commercial Paper Note shall be authenticated in lieu of or in exchange for any Commercial Paper Notes cancelled as provided herein, except as expressly permitted hereunder. All cancelled Commercial Paper Notes held by the Issuing and Paying Agent shall be disposed of as directed by the Commission.

Section 2.10. Execution and Authentication of Commercial Paper Notes. The Commercial Paper Notes (including the Master Note) shall be executed by and in the name of the Commission under this Agreement, by the signature of the General Manager of the Commission attested by the Secretary of the Commission and shall be delivered to the Issuing and Paying Agent . Such signature shall be manually affixed to the Commercial Paper Notes, except that if the Commercial Paper Notes shall have been manually authenticated by the Issuing and Paying Agent, the signature of the General Manager , and Secretary of the Commission may be a printed, lithographed or engraved facsimile thereof. The Issuing and Paying Agent is hereby authorized to cause the blank spaces in forms of Commercial Paper Notes attached hereto to be filled in as may be appropriate and to deliver the Commercial Paper Notes to the Dealers as directed by the Commission.

Section 2.11. Temporary Commercial Paper Notes.
(a) Until definitive Commercial Paper Notes are prepared, the Commission may execute and deliver, or, in the case of registered Commercial Paper Notes, upon request by the Commission, the Authenticating Agent shall authenticate and deliver, temporary Commercial Paper Notes that may be typewritten, printed or otherwise reproduced in lieu of definitive Commercial Paper Notes subject to the same provisions, limitations and conditions as definitive Commercial Paper Notes. The temporary Commercial Paper Notes shall be dated as provided herein, shall be in such denomination or denominations and shall be numbered as the Commission shall determine, and shall be of substantially the same tenor as the definitive Commercial Paper Notes, but with such omissions, insertions and variations as the officers of the Commission executing the same may determine . The temporary Commercial Paper Notes shall only be issued in fully registered form, and may be issued in the form of a single Commercial Paper Note. (b) Without unreasonable delay after the issuance of any temporary Commercial Paper Notes, the Commission shall cause the definitive Commercial Paper Notes to be prepared, executed and delivered. Any temporary Commercial Paper Notes issued shall be exchangeable for definitive Commercial Paper Notes upon surrender to the Issuing and Paying Agent or, in the case of registered Commercial Paper Notes, to the Registrar of any such temporary Commercial Paper Note or Commercial Paper Notes, and, upon request by the Commission, the Authenticating Agent shall authenticate and deliver to the Holder of the temporary Commercial Paper Note or Commercial Paper Notes, in exchanges therefor, a like principal amount of definitive Commercial Paper Notes in authorized denominations of the same interest rate and maturity date . Until so exchanged the temporary Commercial Paper Notes shall in all respects be entitled to the same benefits as definitive Notes executed and delivered pursuant hereto.
(c) All temporary Commercial Paper Notes surrendered in exchan ge for a definitive Commercial Paper Note or Commercial Paper Notes shall forthwith be cancelled by the Issuing and Paying Agent or the Registrar.

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Section 2.12. Non-Presentment of Commercial Paper Notes; Unclaimed Money. (a) If any Commercial Paper Notes are not presented for payment when the principal thereof becomes due, all liability of the Commission to the Holder thereof for the payment of such Commercial Paper Notes shall be completely discharged if funds sufficient to pay such Commercial Paper Notes and the interest due thereon to the stated maturity date shall be held by the Issuing and Paying Agent for the benefit of such Holder, and thereupon it shall be the duty of the Issuing and Paying Agent to hold such funds subject to subsection (b) below, without liability for interest thereon, for the benefit of such Holder, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature under this Agreement or on, or with respect to, such Commercial Paper Note.
(b) Anything contained herein to the contrary notwithstanding, any money held by the Issuing and Paying Agent for the payment and discharge of any Commercial Paper Notes which remains unclaimed for two (2) years after the date when the payments on such Commercial Paper Notes have become payable, if such money was held by the Issuing and Paying Agent on such date, or for two (2) years after the date of deposit of such money if deposited with the Issuing and Paying Agent after the date when the principal of such Commercial Paper Notes have become payable, shall upon written direction from the Commission be repaid by the Issuing and Paying Agent to the Commission as its absolute property free from trust, and the Issuing and Paying Agent shall thereupon be released and discharged with respect thereto and the Holders shall look only to the Commission for the payment of the principal of such Commercial Paper Notes and the interest due thereon to the stated maturity date; provided that before directing the Issuing and Paying Agent to make any such pay ment to the Commission, Commission shall publish once in The Wall Street Journal a notice that such money remains unclaimed and that after a date named in such notice, which date shall not be less than sixty (60) days after the date of the earliest publication of such notice, the Commission shall direct the Issuing and Paying Agent to pay to the Bank so much of such money as the Bank certifies to the Commission and the City, that the Commission owes to the Bank with respect to any Commercial Paper Note or u nder the Reimbursement Agreement or this Agreement, and the Commission shall direct the Issuing and Paying Agent to pay any balance of such money then unclaimed will be returned to the Commission.

Section 2.13. SPANS Online.
(a) The Commission and each Designated Represen tative may use the U.S. Bank Securities Processing Automated Notes System Online (“SPANS Online”) instruction and reporting communication service to transmit instructions to the Issuing and Paying Agent or obtain reports with respect to the Commercial Paper Notes. The Commission acknowledges that (i) some or all of the services utilized in connection with SPANS Online are furnished by SS&C Technologies, Inc. (“SS&C”), (ii) SPANS Online is provided to the Commission “AS IS” without warranties or representat ions of any kind whatsoever, and (iii) SPANS Online is proprietary and confidential property disclosed to the Commission in confidence and may be utilized only on the SPANS Online Terms and Conditions as set forth in the SPANS Online website and for purposes set forth in this Agreement.
(b) To permit the use of SPANS Online to transmit instructions and/or obtain reports with respect to the Commercial Paper Notes, the Issuing and Paying Agent will supply the Commission with a customer identification number and initial passwords. The Commission may thereafter change its passwords directly through SPANS Online. The Commission will keep all information relating to its identification number and passwords strictly confidential and will be responsible for the maintenance of adequate security over its customer identification number and

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passwords. Instructions transmitted over SPANS Online and received by the Issuing and Paying Agent pursuant to this Agreement shall be deemed conclusive evidence that such instructions are correct and complete and that the issuance or redemption of the Commercial Paper Notes directed thereby has been duly authorized by the Commission.
(c) Instructions transmitted via SPANS Online shall be the equivalent to the giving of a duly authorized written instruction which the Issuing and Paying Agent may act upon without liability.

Section 2.14. Representations and Warranties of the Commission. The Commission hereby warrants and represents to the Issuing and Paying Agent, and, each request to issue Commercial Paper Notes or Bank Notes shall constitute the Commission’s continuing warranty and representation, as follows:
(a) This Agreement is, and all Commercial Paper Notes and Bank Notes delivered to the Issuing and Paying Agent pursuant to this Agreement will be, duly authorized, executed and delivered by the Commission . The Issuing and Paying Agent’s appointment to act for the Commission hereunder is duly authorized by the Commission. (b) The issuance and delivery of the Commercial Paper Notes and Bank Notes will not violate any state or federal law and the Commercial Paper Notes and Bank Notes do not require registration under the Securities Act of 1933, as amended. (c) This Agreement constitutes, and the Commercial Paper Notes and Bank Notes, when completed, countersigned, and delivered pursuant hereto, will constitute, the Commission’s legal, valid and binding obligations enforceable against the Commission in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, other similar laws affecting the rights of creditors generally and by general principles of equity and by the limitations upon remedies against municipalities under California law. (d) The Commission is duly organized and validly existing as a commission of the City pursuant to the Charter and no liquidation, dissolution, bankruptcy, windup or similar proceedings have been instituted with respect to the Commission. (e) The Commission has, and at all relevant times has had, all necessary power and authority to execute, deliver and perform this Agreement and to issue the Commercial Paper Notes and Bank Notes.
(f) The Commission has taken all actions which are required for the authorization of the issuance of the Commercial Paper Notes and Bank Notes, and for the authorization, execution, delivery and performance of this Agreement, and such actions do not require the approval or consent of any holder or trustee of any indebtedness or obligations of the Commission. (g) The issuance of Commercial Paper Notes and Ban k Notes by the Commission (i) does not and will not contravene any provision of any governmental law, regulation or rule applicable to the Commission, and (ii) does not and will not conflict with, breach or contravene the provisions of any contract or other instrument binding upon the Commission. (h) Each Issuance Request given to the Issuing and Paying Agent in accordance with this Agreement shall constitute a representation and warranty by the Commission th at the issuance and delivery of such Commercial Paper Note(s) or Bank Notes(s) have been duly and validly authorized by the Commission.

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ARTICLE III

FUNDS AND ACCOUNTS; APPLICATION OF NOTE PROCEEDS
Section 3.01. Establishment and Designation of Funds and Accounts. (a) There is hereby established a Construction Fund, which the City Treasurer shall hold in accordance with this Agreement;
(b) There is hereby established hereunder a Debt Service Fund, and the Issuing and Paying Agent shall hold such fund in accordance with this Agreement and within such fund establish and maintain the following accounts:
(i) Debt Service Account;
(ii) Bank Payment Account; and
(iii) Bank Note Debt Service Account;
Section 3.02. Deposit of Proceeds of Commercial Paper Notes. Immediately upon receipt thereof, or upon the Issuing and Paying Agent’s confirmation that settlement has occurred following Note Depository’s established settlement time, the Issuing and Paying Agent shall first deposit the proceeds of the sale of any Commercial Paper Notes into the Bank Payment Account in an am ount equal to the Unpaid Drawings, if any, made on the Letter of Credit to pay principal of, and/or interest on, the Commercial Paper Notes and, upon the Commission’s written direction, unreimbursed Advances under the Reimbursement Agreement; and upon the Commission’s written direction, shall then transfer the remaining proceeds to the City Treasurer for deposit in the Construction Fund. The Commission authorizes the Issuing and Paying Agent to allow the Bank access to SPANS On -line to monitor issuance act ivity on an ongoing basis.

Section 3.03. Application of Moneys in Construction Fund . (a) Moneys in the Construction Fund shall be applied by the Commission to the payment of the Cost of Water Enterprise Projects and to the payment of the administrative costs related to th e Commercial Paper Notes, including but not limited to the fees and expenses of the Dealers, the Issuing and Paying Agent, the Rating Agencies, the Bank and any other attorneys, consultants or service providers, which administrative costs shall be paid by the Commission on or about the last day of March, June, September and December of each year. (b) The General Manager of the Commission is hereby authorized to disburse from the Construction Account the amount required for the payment of the Cost of Water Enterprise Projects and administrative costs and is directed to make such disbursements upon receipt of a warrant drawn by the Controller. The Issuing and Paying Agent has no duties or obligations of any kind with respect to the Construction Fund.

Section 3.04. Deposits Into and Uses of the Debt Service Account and the Bank Payment Account.
(a) On or before 1:00 p.m., New York City time, on the maturity date or acceleration date of each Commercial Paper Note or on the date on which the Bank honors payment of a Drawing in connection with a Final Drawing Notice, the Commission shall deposit, or cause to be deposited, with the Issuing and Paying Agent in immediately available funds from amounts

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representing proceeds of sale of Commercial Paper Notes (as required by Section 3.02 hereof) or from Available Water Enterprise Revenues (or borrowings secured thereby) for deposit in the Bank Payment Account, an amount sufficient, together with all other amounts available to the Issuing and Paying Agent in the Bank Payment Account which the Issuing and Paying Agent shall immediately apply to reimburse the Bank in full for the amounts drawn under the Letter of Credit to pay principal of and interest due on all Commercial Paper Notes on such maturity date or acceleration date or on the date on which the Bank honors payment of a Drawing in connection with a Final Drawing Notice. The Issuing and Paying Agent shall make information available to the Commission, by way of SPANS Online or otherwise, on or before 5:00 p.m., New York City time, on the Business Day prior to such maturity date or acceleration date of each Commercial Paper Note or the date on which the Bank is to honor payment of a Drawing in connection with a Final Drawing Notice, as the case may be, as to the total amount of principal and interest due on such maturity date or acceleration date or the date on which the Bank is to honor payment of a Drawing in connection with a Final Drawing Notice.
(b) Each Drawing received by the Issuing and Paying Agent as a result of a drawing under the Le tter of Credit to pay the principal of and interest on maturing or accelerated Commercial Paper Notes (including a Drawing in connection with a Final Drawing Notice) shall be deposited into the Debt Service Account and used solely to pay the principal of and interest on such maturing Commercial Paper Notes upon the proper presentment thereof. (c) Moneys in the Debt Service Account and the Bank Payment Account shall not be invested.

Section 3.05. Drawings Under the Letter of Credit. The Issuing and Paying Agent agrees to hold the Letter of Credit pursuant to the terms of this Agreement for the benefit of the Holders of the Commercial Paper Notes. On or before each maturity date or acceleration date for any Commercial Paper Note, an authorized officer of the Issuing and Paying Agent shall present all required drawing certificates and accompanying documentation, in accordance with the terms of the Letter of Credit and the Reimbursement Agreement to the Bank in order to demand payment be made under the Letter of Credit on such maturity date or acceleration date at such time and in such amount not in excess of the Stated Amount so as to be timely and sufficient to pay the entire amount of principal and interest becoming due on all Commercial Paper Notes on such date; provided th at, in each case any certificates of the Issuing and Paying Agent shall be signed by one who states therein that such person is a duly authorized officer of the Issuing and Paying Agent . Upon receipt of a Final Drawing Notice from the Bank, the Issuing an d Paying Agent shall draw on the Letter of Credit no later than the second Business Day prior to the Termination Date after the receipt of such notice in an amount at least equal to the principal of and interest accrued and to accrue until the scheduled ma turity date on all related outstanding Commercial Paper Notes to be paid on such scheduled maturity date pursuant to Section 2.02. This Agreement shall constitute the irrevocable instruction by the Commission to the Issuing and Paying Agent to make the Drawings under the Letter of Credit as provided hereunder.

The Issuing and Paying Agent shall not make any Drawing on the Letter of Credit for the purpose of paying any Commercial Paper Notes registered in the name of the Commission.

Section 3.06. Investments Authorized. Moneys held by the Issuing and Paying Agent in the Debt Service Account and the Bank Payment Account shall not be invested. Moneys held by the Issuing and Paying Agent in the Bank Note Debt Service Account shall be invested as directed by a Designated Representative pursuant to Section 4.04(b). Money held by the Issuing and Paying Agent in the Rebate Fund shall be invested by the Issuing and Paying Agent in Qualified Investments pending application as provided herein solely at the written direction of a Designated Representative, shall be registered in the

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name of the Issuing and Paying Agent where applicable, as Issuing and Paying Agent, and shall be held by the Issuing and Paying Agent . Money held in any fund, account, or subaccount hereunder (other than the Rebate Fund or the Bank Note Debt Service Account) may be commingled for purposes of investment only; provided, however, that each fund, account, or subaccount held by the Issuing and Paying Agent hereunder shall be accounted for separately. For the avoidance of doubt, the Issuing and Paying Agent shall have no obligation to determine whether any investment directed by a Designated Representative is a Qualified Investment . The Issuing and Paying Agent may elect, but shall not be obligated, to credit the Bank Note Debt Service Account and the Rebate Fund with funds representing income or principal payments due on, or sales proceeds due in respect of, assets in the Bank Note Debt Service Account or the Rebate Fund, or to credit to the Bank Note Debt Service Account or the Rebate Fund assets intended to be purchased with such funds, in each case before actually receiving the requisite funds from the payment source, or to otherwise advance funds for Bank Note Debt Service Account or the Rebate Fund transactions .

Notwithstanding anything else in this Agreement, (i) any such crediting of funds or assets shall be provisional in nature, and the Issuing and Paying Agent shall be authorized to reverse or offset any such transactions or advances of funds in t he event that it does not receive good funds with respect thereto, and (ii) nothing in this Agreement shall constitute a waiver of any of U.S. Bank Trust Company, National Association’s rights as a securities intermediary under Uniform Commercial Code §9-206. The Issuing and Paying Agent may also set-off and deduct funds in the Bank Note Debt Service Account or the Rebate Fund to pay the face amount of any checks, automated clearinghouse transactions or other deposits that have been credited to such accoun t or fund, as applicable, but are subsequently returned unpaid or reversed.

Section 3.07. Moneys Remaining in Funds and Accounts. At any time there are no Commercial Paper Notes Outstanding or any Bank Notes Outstanding, the Commission may withdraw moneys from any Fund or Account established hereunder by written direction to the Issuing and Paying Agent . Upon receipt of such a written request, the Issuing and Paying Agent shall deliver any amounts so specified to, or upon the order of, the Commission.

ARTICLE IV

THE BANK NOTES
Section 4.01. Authorization and Terms of Bank Notes.
(a) The Commission has authorized the issuance of one or more series of its Bank Notes, as provided in the Reimbursement Agreement . Bank Notes shall be issued on the date the Letter of Credit or Alternate Facility is delivered to evidence the obligation of the Commission to repay any Unpaid Drawings. Any Bank Notes issued to the Bank shall be designated the “San Francisco Public Utilities Bank Note, (Water Series, Tax Exempt Subseries A-4 and Taxable Subseries A-4-T – PNC Bank, National Association ),” initially. Bank Notes shall be issued to evidence the obligation of the Commission with respect to all Unpaid Drawings and Advances. A copy of each fully executed Bank Note shall be provided to the Bank, and the Issuing and Paying Agent shall not be responsible for, or have any liability for the issuance of, Bank Notes. (b) The Bank Notes shall be payable at such times and in such amounts as specified in the Bank Note and the Reimbursement Agreement.

Section 4.02. Form of Bank Notes and Authentication Certificate. The definitive Bank Notes and the Certificate of Authentication endorsed thereon shall be substantially in the form set forth in Exhibit B to the Reimbursement Agreement, with such appropriate variations, omissions and insertions as shall be necessary or appropriate in order to accomplish the purpose of the transaction authorized by this Agreement.

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The Bank Notes may have endorsed thereon such legends or text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law or regulation with respect thereto.

Section 4.03. No Transfers of Bank Notes. To the extent permitted by applicable law, the Bank Notes shall be non -negotiable and non -transferable, except that the Bank Notes may be transferred to any successor or assign under the Reimbursement Agreement or Alternate Facility pursuant to the terms thereof or to any successor to the Bank by merger or other business combination.

Section 4.04. Deposits of Available Water Enterprise Revenues in Bank Note Account. (a) On the Business Day before each Bank Note Payment Date, a Designated Representative of the Commission shall allocate and transfer to the Issuing and Paying Agent in immediately available funds for deposit in t he Bank Note Debt Service Account amounts from Available Water Enterprise Revenues, as follows:
(i) An amount equal to the aggregate amount of interest due and payable on such Bank Note Payment Date on all Bank Notes Outstanding payable from Available Water En terprise Revenues; and
(ii) An amount equal to the aggregate amount of principal due and payable on such Bank Note Payment Date on all Bank Notes Outstanding payable from Available Water Enterprise Revenues.
(b) Amounts in the Bank Note Debt Service Account shall be invested in Qualified Investments by the Issuing and Paying Agent as directed in writing by a Designated Representative, for which such Designated Representative will obtain prior approval of the Bank (which approval shall not be unreasonably with held).
(c) The Bank Notes shall not be payable from the proceeds of any Drawing.

ARTICLE V

COVENANTS; REPRESENTATIONS
Section 5.01. No Arbitrage. The Commission shall not take, nor permit to be taken by the Issuing and Paying Agent or otherwise, any action which, if such action had been reasonably expected to have been taken or had been deliberately and intentionally taken on the date of the issuance of any Tax-Exempt Commercial Paper Notes, would have caused such Tax-Exempt Commercial Paper Notes to be “arbitrage bonds” within t he meaning of Section 148(a) of the Code and Regulations. To that end, the Commission will comply with all requirements of Section 148 of the Code to the extent applicable to the Tax-Exempt Commercial Paper Notes. In the event that at any time the Commis sion is of the opinion that for purposes of this Section 5.01 it is necessary to restrict or to limit the yield on the investment of any moneys held by the Issuing and Paying Agent under this Agreement, the Commission shall so instruct the Issuing and Paying Agent in writing, and the Issuing and Paying Agent shall take such action as may be necessary in accordance with such instructions.

Section 5.02. Rebate to United States. The Commission will pay or cause to be paid to the United States Government the amounts requi red by Section 148(f) of the Code and any Regulations promulgated thereunder at the times required thereby. To further the satisfaction of such rebate requirement, there is hereby created, to be held by the Issuing and Paying Agent as a separate fund for the Tax -Exempt

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Commercial Paper Notes distinct from all other funds and accounts held by the Issuing and Paying Agent under the Agreement, a fund designated as the “Rebate Fund.” The Issuing and Paying Agent shall hold any payments received from the Commission for deposit into the Rebate Fund for purposes of ultimate rebate to the United States, all as more particularly described in the Tax Certificate. Pending payment to the United States, moneys held in the Rebate Fund are hereby pledged to secure such payments to the United States as provided herein and in the Tax Certificate, and neither the Commission, the Owners nor any other person shall have any rights in or claim to such moneys. The Issuing and Paying Agent shall invest all amounts held in the Re bate Fund as directed in writing by a Designated Representative in Nonpurpose Investments (as defined in the applicable Tax Certificate), as directed by the Commission in the applicable Tax Certificate. For the avoidance of doubt, the Issuing and Paying Agent shall have no obligation to determine whether any investment directed by a Designated Representative is a Nonpurpose Investment.

Computations of the rebate amount and all calculations under this Sect ion and the Tax Certificate shall be furnished by or on behalf of the Commission . The Issuing and Paying Agent shall be deemed conclusively to have complied with the provisions of this Section if it follows the payment directions of the Designated Representative . The Issuing and Paying Agent shall have no liability or responsibility to enforce compliance by the Commission with the Tax Certificate. The Issuing and Paying Agent shall have no obligation to pay any amounts required to be rebated pursuant to this Section, other than from moneys required to be held in the funds and accounts created under this Agreement, including the Rebate Fund, or from other moneys provided to it by the Commission.

The Commission and the Issuing and Paying Agent shall keep an d retain, for a period of two (2) years following the retirement of the Tax-Exempt Commercial Paper Notes, records of the determinations made pursuant to this Section 5.02.

In order to provide for the administration of this Section 5.02, the Commission may provide for the employment of independent attorneys, accountants and consultants, who shall be selected by the Commission with reasonable care and compensated on such reasonable basis as the Commission may deem appropriate, and the Issuing and Paying Agen t may rely conclusively upon the opinions, calculations, determinations and advice of such attorneys, accountants and consultants employed hereunder.

Section 5.03. Tax Covenant. The Commission shall not use or knowingly permit the use of any proceeds of the Tax-Exempt Commercial Paper Notes or any other funds of the Commission, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Tax-Exempt Commercial Paper Notes being treated as an obligation not described in Section 103(a) of the Code. Without limiting the generality of the foregoing, the Commission will comply with all the requirements and covenants contained in the Tax Certificate. This covenant shall survive the payment in f ull or defeasance of the Tax-Exempt Commercial Paper Notes.

Section 5.04. Taxable Commercial Paper Notes. Notwithstanding anything in this Agreement to the contrary, in the event the Designated Representative designates certain Commercial Paper Notes (the “Taxable Commercial Paper Notes”) as obligations not described in Section 103(a) of the Code, the provisions of Sections 5.01, 5.02 and 5.03 shall not apply to such Taxable Commercial Paper Notes.

Section 5.05. Letter of Credit. The Commission hereby covenants to maintain in effect the Letter of Credit or an Alternate Facility meeting the requirements hereof at all times that Commercial Paper Notes are Outstanding hereunder. The Commission further covenants that if it is unable to obtain a commitment for an Alternate Facility at least 90 days prior to the Expiration Date, it shall use its best efforts, to the extent permitted by law, to endeavor to refinance the outstanding Commercial Paper Notes or Bank Notes, as the case may be.

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Section 5.06. Amounts of Rates and Charges. The Commission covenants to establish, maintain and collect rates and charges with respect to the Water Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes or Water Bonds) to pay the Commercial Paper Notes, the Parity Notes, the Bank Notes, the Parity Bank Notes (as defined in the Reimbursement Agreement) and all other amounts due and owing under the Reimbursement Agreement and under the Parity Credit Agreements (as defined in the Reimbursement Agreement) payable from Water Enterprise Revenues.

Section 5.07. Limitation on Additional Debt. The Commission will not issue any additional bonds, notes or other obligations for borrowed money payable from revenues of the Water Enterprise unless the Commission determines, as evidenced by a certificate of a Designated Representative of the Commission that (i) actual revenues of such enterprise for the most recently completed Fiscal Year, or (ii) projected revenues for the next three Fiscal Years following the issuance of such additional bonds, notes or other indebtedness are or will be sufficient to satisfy Section 5.06 hereof, assuming the issuance of such bonds, notes or other indebtedness to pay any maturing Commercial Paper Notes. If the Commission shall issue su ch certificate, the Commission shall provide a copy to the Bank promptly upon its execution.

Section 5.08. Financial Statements. The Commission will keep proper books of records and accounts of the Water Enterprise, separate and apart from all other records and accounts of the Commission, in which complete and correct entries shall be made of all transactions relating to the Water Enterprise .

Such books and records shall at all times during regular business hours be available to the Bank and to the Holders of the Com mercial Paper Notes or their representatives authorized (at the cost of such Holders as the Commission may charge) in writing, at reasonable hours and upon prior written notice to the Commission and under reasonable conditions. The Commission shall be ent itled to charge the cost of copying any such records to the Bank or the Holders of Commercial Paper Notes, or their representatives, as the case may be.

ARTICLE VI

PLEDGE OF AVAILABLE REVENUES;

LIMITED LIABILITY OF THE COMMISSION
Section 6.01. Available Water Enterprise Reven ues. The Commercial Paper Notes and the Bank Notes are revenue obligations, are not secured by the taxing power of the Commission or the City and shall be payable as to both principal and interest from, and shall be secured solely by a pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of, the Available Water Enterprise Revenues and the Funds and Accounts . The Available Water Enterprise Revenues shall constitute a trust fund held by the Commission and, together with the Funds and Accounts , are hereby pledged by the Commission for the security and payment of the following, without priority or distinction of one over the other, except as expressly provided hereunder: (i) the interest on and principal of the Commercial Paper Notes and the Bank Notes, (ii) all obligations of the Commission relating to such Notes hereunder, (iii) all obligations of the Commission under the Reimbursement Agreement, and (iv) the interest on and principal of all Parity Notes secured by Available Water Enterprise Revenues. The pledge of Available Water Enterprise Revenues and the Funds and Accounts herein made shall be irrevocable until all of the Commercial Paper Notes and the Bank Notes and any Parity Notes secured by Available Water Enterprise Revenues have been paid and retired and any related obligations of the Commission under the Reimbursement Agreement have been satisfied.

Section 6.02. Limited Obligations. The obligation of the Commission to pay the Holders from time to time of Commercial Paper Notes shall be only from Available Water Enterprise Revenues. No Holder of any Commercial Paper Note shall ever have the right to compel any exercise of the taxing power

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of the City to pay any Commercial Paper Note or the interest thereon . The credit of the City is not pledged for the payment of the principal or interest on any Commercial Paper Note or any Bank Note, and the general fund of the City is not liable for the payment of the Commercial Paper Notes or the Bank Notes.

The Holder of the Commercial Paper Notes shall not be entitled to compel the forfeiture of any property of the Commission or the City.

Neither the Commission nor any officer or employee thereof shall be liable or obligated for the payment of the principal of or interest on any Commercial Paper Notes or Bank Notes or for any payment agreed to be made or contemplated pursuant to the terms of this Agreement, save and except from Available Water Enterprise Revenues, and the other moneys pledged thereto under the terms of this Agreement.

ARTICLE VII

ISSUING AND PAYING AGENT; DEALER
Section 7.01. Appointment of Issuing and Paying Agent. The Commission hereby appoints U.S. Bank Trust Company, National Association to serve as Issuing and Paying Agent hereunder. The Issuing and Paying Agent hereby accepts such appointment and hereby agrees to hold such funds, and fulfill such other duties of the Issuing and Paying Agent as more fully set forth in this Agreement . The Commission acknowledges that (i) the Issuing and Paying Agent has previously entered int o a commercial paper certificate agreement (the “Certificate Agreement”) with DTC, a copy of which is on file with the Commission and the Issuing and Paying Agent, and (ii) the continuing effectiveness of the Certificate Agreement is a necessary prerequisite to the Issuing and Paying Agent’s providing services related to the issuance and payment of the Commercial Paper Notes while the Commercial Paper Notes are in book-entry only form and DTC is the Note Depository.

Section 7.02. Reports, Records and Accounts.
(a) The Issu ing and Paying Agent shall at all times keep or cause to be kept proper books and records, as shall be consistent with prudent industry practice, in which complete and accurate entries shall be made of all transactions, including without limitation a complete record of all Issuance Requests, made by it relating to the proceeds of the Commercial Paper Notes, all Funds and Accounts and the Rebate Fund established and maintained by the Issuing and Paying Agent hereunder . Such records shall be available for in spection by the Commission, the City and the Bank on each Business Day upon reasonable notice during reasonable business hours and by any Commercial Paper Noteholder or its agent or representative duly authorized in writing at reasonable hours upon reasonable notice.
(b) The Issuing and Paying Agent shall provide to the Commission or make available by way of SPANS Online or otherwise, each month a report of the amounts deposited in each Fund and Account and the Rebate Fund held by it under this Agreement and the amount disbursed from such Funds and Accounts and the Rebate Fund, the earnings thereon, the ending balance in each such Fund and Account, the investments in each such Fund and Account . The Issuing and Paying Agent shall also make available to the Commission such information regarding the issuance of Commercial Paper Notes during the subject month as the Commission shall request. (c) The Issuing and Paying Agent shall maintain such books, records, and accounts as may be necessary to evidence the obligations of the Commission resulting from the Commercial Paper Notes, the principal amounts owing thereunder, the maturity schedule therefor, the respective rates of interest thereon and the principal and interest paid from time to time thereunder. So long as the Commercial Paper Notes are in book-entry form, in any legal action or proceeding with

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respect to a master note, the entries made in such books, records or accounts shall be, absent manifest error, conclusive evidence of the existence and the amounts of the obligations of the Commission therein recorded.

Section 7.03. Duties. The Issuing and Paying Agent’s duties and responsibilities in connection with the payment of the Commercial Paper Notes shall include:
(a) upon presentment at maturity of a definitive Commercial Paper Note, to pay from the Debt Service Account the principal of and interest on the Commercial Paper Note to the Holder thereof;
(b) to make the necessary and timely drawings under the Letter of Credit in accordance with the terms and provisions thereof in order to effectuate the timely payment of principal of and interest on the Commercial Paper Notes as the same becomes due; (c) to credit amounts received from the Commission for the payment of the principal of or interest on the Commercial Paper Notes to the Bank Payment Account; (d) to credit amounts received from the Bank as a result of drawings under the Letter of Credit to the Debt Service Account;
(e) to keep amounts on deposit in the Debt Service Account separate from all other funds and accounts of the Issuing and Paying Agent and to utilize such amounts in accordance with the terms hereof; and
(f) the Issuing and Paying Agent agrees that it will not reduce, or consent to the reduction of, the Stated Amount of th e Letter of Credit below the amount of Commercial Paper Notes outstanding, together with interest to accrue thereon.

The Issuing and Paying Agent acknowledges that, prior to the issuance of any Commercial Paper Notes, it shall accept delivery of the Letter of Credit.

Section 7.04. Compensation. The Commission agrees to pay compensation for the Issuing and Paying Agent’s services hereunder in accordance with the Issuing and Paying Agent’s fee schedule, as amended from time to time (with notice to and the consent of the Commission), and to reimburse the Issuing and Paying Agent for such disbursements (including the reasonable fees and expenses of counsel). The Issuing and Paying Agent’s fee schedule is attached hereto as Exhibit E. The Commission shall also reimburse t he Issuing and Paying Agent for any fees and charges imposed by the Note Depository with respect to Commercial Paper Notes issued in book-entry form as set forth in the fee schedule. The Issuing and Paying Agent shall have no lien on Commercial Paper Proceeds or on any Drawing under the Letter of Credit for payment of its compensation hereunder.

Section 7.05. Liability; Indemnification.
(a) The Commission agrees that the Issuing and Paying Agent shall not be liable for any losses, damages, liabilities or costs suffered or incurred by the Commission as a result of (i) the Issuing and Paying Agent’s having duly executed Issuance Requests in good faith in accordance therewith and with this Agreement; (ii) the Issuing and Paying Agent’s improperly executing or failing to execute any Issuance Requests because of erroneous Issuance Requests, failure of communications media, or any other circumstances beyond the Issuing and Paying Agent’s control; (iii) the actions or inactions of DTC or any broker, dealer, consignee or agent not selected by the

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Issuing and Paying Agent; or (iv) any other acts or omissions of the Issuing and Paying Agent (or of any of its agents, directors, officers or employees) relating to this Agreement or the transactions or activities contemplated hereby except to the extent, if any, that such other acts or omissions constitute negligence or willful misconduct by the Issuing and Paying Agent (or by any of its agents, directors, officers or employees). In no event shall the Issuing and Paying Agent be liable for incidental, indirect, special, consequential or punitive damages or penalties (including, but not limited to lost profits), even if the Issuing and Paying Agent has been advised of the likelihood of such damages or penalty and regardless of the form of action. None of the provisions contained in this Agreement shall require the Issuing and Paying Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Issuing and Paying Agent’s duties and obligations shall be determined by the express provisions of this Agreement, and the Letter of Representations (including the documents referred to therein), and the Issuing and Paying Agent and their agents shall be responsible for the performance of only such duties and obligations as are specifically set forth herein and therein, and no implied duties or covenants shall be read into any such document against the Issuing and Paying Agent or their agents. The Issuing and Paying Agent has no fiduciary or discretionary duties of any kind. The Issuing and Paying Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Agreement, even if referred to herein or if a copy of such agreement is provided to the Issuing and Paying Agent . Neither the Issuing and Paying Agent nor the Issuing and Paying Agent’s agents shall be required to ascertain whether any issuance or sale of Commercial Paper Note(s) or Bank Notes (or any amendment or termination of this Agreement) has been duly authorized or is in compliance with any other agreement to which the Commission is a party (whether or not Issuing and Paying Agent or any such agent is a party to such other agreemen t). The Issuing and Paying Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability in acting in accordance with the advice of such counsel and shall be fully reimbursed for the reasonable costs of such counsel. The Issuing and Paying Agent has no obligation to determine whether any investment it is directed to make is a Qualified Investment.
(b) To the extent permitted by law, the Commission agrees to indemnify, protect, save and keep harmless the Issuing and Paying Agent and its directors, officers, employees and agents against any costs, expenses, fees (including reasonable legal fees), losses and liabilities which may be imposed on, incurred by, or asserted by the Commission or any other person or entity, against the Issuing and Paying Agent at any time (whether or not also indemnified against the same by the Commission or any other person under any other agreement or instrument, but without double indemnity) in the exercise or performance of its powers and duties under this Issuing and Paying Agent Agreement; provided, however, that the Commission shall not be required to indemnify the Issuing and Paying Agent for costs, expenses, fees, losses and liabilities arising out of negligence, willful misconduct, or bad faith of the Issuing and Paying Agent, its officers, directors, or employees, as determined by a court of competent jurisdiction . In no event shall the Commission or the Issuing and Paying Agent be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section 7.05. (c) This Section 7.05 shall survive any termination of this Agreement and the issuance and payment of any Commercial Paper Notes and the resignation or removal of the Issuing and Paying Agent.

Section 7.06. Additional Information. Upon the reasonable written request of the Commission, the City or the Bank, as applicable, the Issuing and Paying Agent agrees promptly to provide the

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Commission, the City or the Bank, as applicable, with information with respect to the Commercial Paper Notes, including without limitation the Bank Notes, issued and paid hereunder. Such request shall be in written form and shall include the principal amount, date of issue, maturity date, interest rate and amount of interest, as applicable, of each Commercial Paper Note which has been issued or paid by the Issuing and Paying Agent and for which the request is being made.

Section 7.07. Resignation and Replacement of Issuing and Paying Agent. The Issuing and Paying Agent may at any time resign and be discharged of the duties and obligations created by this Agreement by giving at least 30 days’ written notice to the Bank, the City and the Commission. The Issuing and Paying Agent may be removed, with the written consent of the Bank, which consent shall not be unreasonably withheld, at any time by an instrument signed by a Designated Representative and filed with the Issuing and Paying Agent and the Bank. No such resignation or removal shall become effective, however, until a successor Issuing and Paying Agent has been selected and assumed the duties of the Issuing and Paying Agent hereunder in writing and the Letter of Credit has been transferred to the successor Issuing and Paying Agent in accordance with its terms. If no successor has been appointed within such 30-day period, then the Issuing and Paying Agent shall have the right to petition a court of competent jurisdiction for the appointment of the Issuing and Paying Agent’s successor hereunder. The Issuing and P aying Agent shall be reimbursed by the Commission for any and all expenses in connection with any such petition and appointment.

In the event of the resignation or removal of the Issuing and Paying Agent, the Issuing and Paying Agent shall pay over, assign and deliver to the Commission any moneys held by it in such capacity to its successor after payment by the Commission of any unpaid fees, expenses or indemnification payments due and owing.

The Issuing and Paying Agent shall, at all times, be a bank or trust company having an office in New York, New York and shall at all times be a corporation or a national banking association organized and doing business under the laws of the United States of America or of any state with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and be subject to supervision or examination by federal or state authority. If such corporation or national banking association publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this section, the combined capital and surplus of such corporation or national banking association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

Any corporation or national banking association into which any Issuing and Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or national banking association resulting from any merger, consolidation or conversion to which any Issuing and Paying Agent shall be a party, or any corporation or national banking association succeeding to the corporate trust business of any Issuing and Paying Agent shall be the successor of the Issuing and Paying Agent if such successor corporation or national banking associat ion is otherwise eligible under this Section, without the execution or filing of any further act on the part of the Issuing and Paying Agent or such successor corporation or national banking association.

Section 7.08. Dealers. The Commission hereby agrees that, at or prior to the time of issuance of any Commercial Paper Notes, the Commission will enter into a Dealer Agreement with each Dealer. The Commission covenants that at all times after the initial issuance of any Commercial Paper Notes and prior to the Terminat ion Date, it will maintain in effect one or more Dealer Agreements, pursuant to which each Dealer will agree to fulfill the duties and obligations of the Dealer as set forth in this Agreement and its Dealer Agreement.

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Section 7.09. Compliance with City Requirements. The Issuing and Paying Agent hereby agrees to comply with Section 9.09 hereof.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF

COMMERCIAL PAPER NOTEHOLDERS
Section 8.01. Events of Default. If one or more of the following events (herein called “Events of Default”) shall happen, that is to say:
(a) if default shall be made in the due and punctual payment of the principal of any Commercial Paper Notes when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise;
(b) if default shall be made in the due and punctual payment of any installment of interest on any Commercial Paper Notes when and as such interest installment shall become due and payable; or
(c) if the principal of any Bank Note shall be declared due and payable prior to the maturity thereof pursuant to any Bank Note or the Reimbursement Agreement, as the case may be; then, and in every such event, (i) any Holder of any Commercial Paper Notes at the time outstanding may, by notice to the Commission, declare the principal of such Holder’s Commercial Paper Notes, and the interest accrued thereon, to be due and payable immediately, whereupon the same shall become and shall be immediately due and payable, anything in this Agreement or in the Commercial Paper Notes contained to the contrary notwithstanding and the Issuing and Paying Agent shall immediately make thereafter a Drawing under the Letter of Credit to pay the amount of interest and principal then due on the Commercial Paper Notes and; (ii) the Bank may, by notice to the Commission, declare the principal of the Bank Notes, and the interest accrued thereon, to be due and payable immediately, as and to the extent provided in the Reimbursement Agreement, and so long as the Bank has not failed to honor a properly presented and conforming Drawing under the Letter of Credit, the Issuing and Paying Agent shall apply any moneys in the Bank Note Debt Service Account and, the Bank Payment Account, at the direction of the Bank to the payment of the Bank Notes and amounts due t o the Bank under the Reimbursement Agreement, upon which direction the Issuing and Paying Agent may conclusively rely without inquiry, investigation or notice to the Commission or any other person or entity.

Section 8.02. Suits at Law or in Equity and Mandamus. In case one or more Events of Default shall occur, then and in every such case any Holder of any Commercial Paper Note at the time outstanding and the Bank shall be entitled to proceed to protect and enforce such Holder’s rights or the Bank’s rights, as the case may be, by such appropriate judicial proceeding as such enforcer shall deem most effectual to protect and enforce any such right, whether by mandamus or other suit or proceeding at law or in equity, for the specific performance of any covenant or agreement contained in this Agreement, or in aid of the exercise of any power granted in this Agreement, or to enforce any other legal or equitable right . The provisions of this Agreement shall be a contract among the Commission, the Bank and each and every Holder of Commercial Paper Notes, and the duties of the Commission and of the Board shall be enforceable by the Bank (subject to Section 8.04 hereof) or any Commercial Paper Noteholder by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction.

Section 8.03. Remedies Not Exclusive. No remedy herein conferred upon the Bank or the Holders of Commercial Paper Notes is intended to be exclusive of any other remedy. Every such remedy shall be

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cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised at any time or from time to time, and as often as may be necessary, by the Bank (subject to Section 8.04 hereof) or the Holder of any one or more of the Commercial Paper Notes.

Section 8.04. Bank to Control Remedies. So long as the Bank is not insolvent and has not failed to honor a properly presented and conforming Drawing under the Letter of Credit, no remedy (other than the remedy of the Issuing and Paying Agent to make a Drawing under the Letter of Credit) under this Agreement with respect to the Commercial Paper Notes may be pursued by the Holders without the prior written consent of the Bank.

Section 8.05. Waiver of Events of Default. No Event of Default with respect to the Commercial Paper Notes or the Bank Notes shall be waived pursuant to Section 8.04 unless after such waiver the Issuing and Paying shall have received written notice from the Bank that the Letter of Credit has been reinstated and is in full force and effect.

ARTICLE IX

MISCELLANEOUS
Section 9.01. Supplemental Agreements. The Commission may modify or amend this Agreement and the rights and obligations of the Bank and the Holders of Commercial Paper Notes and the Commission hereunder at any time by a su pplemental agreement, without notice to or the consent of the Bank or any Commercial Paper Noteholder, but only to (a) make such provisions for the purpose of (i) curing any ambiguity or formal defect or omission herein, (ii) curing, correcting or supplementing any defective provision contained in this Agreement which may be inconsistent with any provision herein, or to make any other provisions with respect to matters or questions arising hereunder which shall not have a material adverse effect on the Holders or the Bank; (iii) granting or conferring upon the Holders and the Bank any additional rights, remedies, powers or authority that may be lawfully granted or conferred; (iv) securing additional revenues or providing additional security for the payment of any Commercial Paper Notes and the Bank Notes; (v) complying with requirements of the Code, in order to satisfy the covenants of Section 5.01 hereof; (vi) adding requirements the compliance of which is required by a Rating Agency in connection with issuing or maintaining a rating on the Commercial Paper Notes and (vii) making any other change or addition hereto which, in the opinion of Bond Counsel, shall not have a material adverse effect on the interests of the Holders or the Bank. Any amendment or supplement to this Agreement that modifies or amends the rights or obligations of the Issuing and Paying Agent shall require an amending or supplementing document to this Agreement that is entered into by, and acceptable to, the Commission and the Issuing and Paying Agent . The Commission shall provide a copy of any such amendment to the Bank and the City promptly upon its execution.

Section 9.02. Alternate Facility. Notwithstanding anything herein to the contrary, the Commission may obtain an Alternate Facility to replace the credit facility then in effect hereunder so long as said Alternate Facility shall go into effect at least one Business Day prior to the termination of the credit facility then in effect, and the Expiration Date with respect to such Alternate Facility shall be no earlier than the earlier of (i) six (6) months after its date or (ii) the Expiration Date set forth in the credit facility then in effect . The Alternate Facility shall have a Stated Amount (as such term is used in the Letter of Credit) at least as great as the credit facility being replaced. The following are further conditions to the Issuing and Paying Agent’s ability to release an existing credit facility and accept an Alternate Facility, as directed by the Commission in writing:

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(a) The Commission shall deliver written notice of the proposed Alternate Facility to the Issuing and Paying Agent, the Bank, the City and each Dealer not less than 45 days prior to the substitution date.
(b) At least one business day prior to the substitution date, the Commission shall confirm to the Issuing and Paying Agent that it has received written evidence from each Rating Agency then maintaining a rating on the Commercial Paper Notes, that such substitution will not, in and of itself, result in any rating th en assigned to the Commercial Paper Notes being suspended, reduced or withdrawn.
(c) The Issuing and Paying Agent shall, at the expense and direction of the Commission, deliver written notice of such substitution to the registered Holders of the Commercial Paper Notes at least 30 days prior to the substitution date. If any Outstanding Note is in bearer form, the Issuing and Paying Agent shall, at the expense and direction of the Commission, publish notice of the substitution of such Alternate Facility in a newspaper in which the Commission regularly publishes its legal notices at least 30 days prior to the substitution date. (d) An opinion or opinions of counsel to the successor Bank shall be delivered to the Commission to the effect that the Alternate Facility is a legal, valid and binding obligation of the issuing Bank and is enforceable against the Bank in accordance with its terms. (e) An opinion of Bond Counsel shall be delivered to the Commission to the effect that the substitution is authorized hereunder and (except with respect to Taxable Commercial Paper Notes) will not, in and of itself, adversely affect the exclusion from gross income for federal tax purposes of interest on the Tax-Exempt Commercial Paper Notes.

Section 9.03. Amendments to Water Bonds Indenture. The Comm ission hereby covenants not to make any amendment to the Water Bonds Indenture which would materially adversely affect the interest of the Holders from time to time of the Commercial Paper Notes or the Bank, unless the Commission shall have first obtained the consents to such amendments by the Bank . Upon the execution of any such amendment without the consents of the Bank, the Commission shall be required to certify that such amendment to the Water Bonds Indenture, will not have such effect.

Section 9.04. Timeliness of Deposits. Funds shall be deemed transferred for purposes of timeliness of receipt under this Agreement when transfer instructions for transfer by federal reserve wire have been given and a federal wire number confirmation has been received; provided that the party to receive such funds shall not be required to take any action required to be taken hereunder with respect to such funds until it has confirmation of actual receipt of such funds.

Section 9.05. Discharge and Defeasance of Commercial Paper Notes. Commercial Paper Notes shall not be deemed to have been paid in full, and the obligation of the Commission thereunder to have ceased, terminated and become void and completely discharged and satisfied, unless payment of the principal of, and interest on the Commercial Paper Notes either:
(a) shall have been made or caused to be made in accordance with the terms of the Commercial Paper Notes and this Agreement, or
(b) shall have been provided for by irrevocably depositing with the Issuing and Paying Agent and irrevocably set ting aside exclusively for such payment (i) if at least one day prior to the date of such deposit, there shall have been delivered to the Commission written evidence from each Rating Agency then maintaining a rating on the Commercial Paper Notes, that such defeasance will

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not, in and of itself, result in any rating then assigned to the Commercial Paper Notes being suspended, reduced or withdrawn, Available Moneys sufficient to make such payment, and/or (ii) noncallable obligations backed by the full faith and credit of the United States Government (“Government Obligations”) purchased with Available Moneys, in each case, in an amount sufficient, with reinvestment, to pay when due the principal amount of the Commercial Paper Notes, including accrued interest t hereon;
provided that if payment of the principal of, and interest on the Commercial Paper Notes is paid pursuant to (b) above, the Commission shall have received (x) a verification report from an independent firm of nationally recognized certified public accountants addressed to the Commission, acceptable in form and substance to the Commission verifying the sufficiency of the escrow established to pay the Commercial Paper Notes in full on the maturity date, and (y) an opinion of Bond Counsel addressed to the Commission acceptable in form and substance to the Commission to the effect that the Commercial Paper Notes are no longer Outstanding under this Issuing and Paying Agent Agreement, a copy of which verification report and opinion shall be provided by th e Commission to each Rating Agency then maintaining a rating on the Commercial Paper Notes.

Section 9.06. Payments or Actions Occurring on Non -Business Days. If a payment date is not a Business Day at the place of payment or if any action required hereunder is required on a date that is not a Business Day, then payment may be made at that place on the next Business Day or such action may be taken on the next Business Day with the same effect as if payment were made on the action taken on the stated date, and no interest shall accrue for the intervening period; provided, however, that this Section 9.06 shall not apply to Bank Notes.

Section 9.07. Notices to Rating Agencies. The Commission shall provide each Rating Agency, with a copy to the City, with written notice of the occurrence of the following events: (i) removal or appointment of any Dealer (ii) the appointment of a successor Issuing and Paying Agent, (iii) amendments to this Agreement or the Letter of Credit, (iv) the expiration, termination, substitution or extension of t he Letter of Credit or Alternate Facility, and (v) the defeasance or acceleration of all Outstanding Commercial Paper Notes. Notice to Moody ‘s shall be addressed as follows (or as provided in any subsequent notice to the Commission) Moody’s Investors Service, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Attention: Public Finance Group; and notice to Standard and Poor’s shall be addressed as follows (or as provided in any subsequent notice to the Commission) Standard and Poor’s, 55 Water Street, 41st Floor, New York, New York 10041, Attention: Structured Finance LOC Surveillance Group, [email protected]; and notice to Fitch shall be addressed as follows: Fitch Ratings, One State Street Plaza, New York, New York, 10004, Attention: Structured Finance.

Section 9.08. Issuance Requests; Addresses. Issuance Requests hereunder shall be (a) mailed, (b) telephoned, (c) transmitted by facsimile device, or email and/or (d) transmitted via SPANS Online described in Section 2.13 hereof to the Issuing and Paying Agent at the address, telephone number, email address or through S PANS Online and shall be deemed delivered upon receipt by the Issuing and Paying Agent at the address, telephone number or email address specified below or through S PANS Online.

U.S. Bank Trust Company, National Association
Attention: Money Market Operations
111 Fillmore Ave E
St. Paul, MN 55107
Telephone: (651) 466-5617
Email address: [email protected]

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All notices, requests, demands, including any No-Issuance Notices, Final Drawing Notices and other communications hereunder (excluding Issuance Requests) shall be in writing and shall be deemed to have been duly given upon delivery by hand (against receipt), or three days after such notice, request, demand, or other communication is delivered to a United States Post Office certified mail (against receipt) or by regular mail (upon receipt) to the party and at the address set forth below or at such other address as a party may designate by written notice, or on the day of receipt of any email, upon confirmation of receipt by telephone:

If to the Commission: City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Avenue, 13th Floor
San Francisco, California 94102
Telephone: (415) 554-3155
Facsimile: (415) 554-3161
If to the City: City and County of San Francisco
Office of Public Finance
Attention: Director of Public Finance
City Hall, Room 338
San Francisco, California 94102
Telephone: (415) 554-4862
Facsimile: (415) 554-4864
with copies to: City and County of San Francisco
Office of the Treasurer
Attention: Treasurer
City Hall, Room 140
San Francisco, California 94102
Telephone: (415) 554-4476
Facsimile: (415) 554-4672
City and County of San Francisco Office of the Controller Attention: Controller
City Hall, Room 316
San Francisco, California 94102
Telephone: (415) 554-7500
Facsimile: (415) 554-7466
If to the Dealers: At the address, telephone number and email address set forth in the each Dealer Agreement

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If to the Issuing and
Paying Agent: U.S. Bank Trust Company, National Association Attention: Denia Larios
100 Wall Street, 6th Floor
New York, New York 10005
Telephone: (212) 361-4383
Email address: [email protected]
If to the Bank: As set forth in the Reimbursement Agreement.

Notwithstanding the foregoing, any notices required to be sent or received under the Credit Agreement shall be sent and received as provided therein. The Issuing and Paying Agent shall not have any duty to confirm that the person sending any notice, instruction or other communication (a “Notice”) by electronic transmission (including by e-mail, web portal or other electronic methods) is, in fact, a person authorized to do so. Electronic signatures believed by the Issuing and Paying Agent to comply with the ESIGN Act of 2000 or other applicable law (including electronic images of handwritten signatures and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other digital signature provider acceptable to the Issuing and Paying Agent) shall be deemed original signatures for all purposes. The Commission assumes all risks arising out of the use of electronic signatures and electronic methods to send Notices to the Issuing and Paying Agent, including without limitation the risk of Agent acting on an unauthorized Notice, and the risk of interception or misuse by third parties. Notwithstanding the foregoing, the Issuing and Paying Agent may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to the Issuing and Paying Agent in lieu of, or in addition to, any such electronic Notice.

Section 9.09. Reserved.

Section 9.10. Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of the State of California.

Section 9.11. Assignment; Issuing and Paying Agent’s Successor in Interest. This Agreement may not be assigned by either the Commission or the Issuing and Paying Agen t except by a writing or writings duly executed by the duly authorized representatives of the Commission and the Issuing and Paying Agent and approved in writing by the Bank (which approval shall not be unreasonable withheld). Anything in this Agreement to the contrary notwithstanding, any corporation or national banking association into which the Issuing and Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or national banking association resulting from any merger, consolidation or conversion to which the Issuing and Paying Agent shall be a party, or any corporation or national banking association succeeding to the corporate trust business of the Issuing and Paying Agent shall be the successor of the Issuing and Paying Agent if such successor corporation or national banking association is otherwise eligible under Section 7.07 hereof, without the execution or filing of any document or any further act on the part of the Issuing and Paying Agent or such successor corporation or national banking association.

Section 9.12. Complete Agreement. This Agreement contains the entire understanding and agreement between the Commission and the Issuing and Paying Agent with respect to the subject matter hereof and all prior agreements, understandings, representations, statements, promises, inducements, negotiations and undertakings between the parties with respect to said subject matter are superseded hereby.

Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, and all of which shall constitute but one and the same instrument. The delivery of

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copies of this Agreement as executed by PDF or facsimile transmission shall constitute effective execution and delivery as to the parties an d may be used in lieu of originals for all purposes.

Section 9.14. Section Headings. Section headings in this Agreement are for convenience of reference only, shall not constitute part of this Agreement and shall not be used to continue the meaning or intent of the p rovisions hereof.

Section 9.15. Waiver of Set-Off, Offset Lien or Counterclaims. Except as provided in Section 3.06 with respect to amounts in the Bank Note Debt Service Account and the Rebate Fund, the Issuing and Paying Agent hereby waives to the fullest extent possible under applicable law any and all rights of set-off, offset, lien or counterclaim it may have with respect to any amounts held by it in any Fund or Account by reason of any claim it may have against the Commission, the Bank or any other person.

Section 9.16. Benefit of Agreement. This Agreement is solely for the benefit of the parties hereto and the owners of the Commercial Paper Notes and the Bank Notes and no other person or entity shall acquire or have any right under or by virtue hereof.

Section 9.17. Covenant of Further Assurances . It is hereby covenanted and warranted by the Commission that all representations and recitals contained in this Agreement are true and correct and that the Commission, and their appropriate officials, have duly taken all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them, for collection of Available Water Enterprise Revenues in accordance with law and for carrying out the provisions of this Agreement.

Section 9.18. Waiver of Personal Liability. No officer or employee of the Commission shall be individually or personally liable for the payment of the Commercial Paper Notes or the Bank Notes, but nothing contained herein shall relieve any officer or employee of the Commission from the performance of any official duty provided by any applicable provision of law or hereby.

Section 9.19. Acquisition of the Commercial Paper Notes by the Commission. All Commercial Paper Notes acquired by the Commission, whether by purchase or gift or otherwise, shall be surrendered to the Issuing and Paying Agent for cancellation.

Section 9.20. Notice by Mail. With respect to Commercial Paper Notes, any notice required to be given hereunder by mail to the Holders shall be given by mailing a copy of such notice, first-class postage prepaid, to the Holders of all the Commercial Paper Notes at their addresses appearing in the books required to be kept by the Issuing and Paying Agent pursuant to the provisions of this Agreement.

Section 9.21. Partial Invalidity. If any one or more of the condition s, covenants or terms contained herein or required herein to be observed or performed by or on the part of the Commission, the Issuing and Paying Agent or the Bank shall be contrary to law, then such condition or conditions, such covenant or covenants, or such term or terms shall be null and void and shall be deemed separable from the remaining conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Commercial Paper Notes, and the Holders and the Bank shall retain all the benefit, protection and security afforded to them hereunder and under all provisions of applicable law. The Commission declares that it would have executed and delivered this Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Commercial Paper Notes pursuant hereto irrespective of the fact that any one or more of the articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.

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Section 9.22. Reference to the Bank . Notwithstanding any provisions contained herein to the contrary, after the expiration or termin ation of the Letter of Credit or Alternate Facility, by its terms (or if a Bank shall have failed to honor a properly presented and conforming Drawing under the Letter of Credit or Alternate Facility), and after all obligations owed to a Bank pursuant to t he Letter of Credit or Alternate Facility and the Reimbursement Agreement (other than the right to indemnification and other rights which purport to survive satisfaction of present payment obligations) have been paid in full or discharged, all references t o the Bank contained herein shall be null and void and of no further force and effect.

Section 9.23. City Requirements. The Bank hereby agrees to the City’s requirements, as provided in Exhibit F attached hereto and incorporated hereby by this reference.

Section 9.24. Trade; Service Marks . The Commission agrees that it will not (a) use any of the Issuing and Paying Agent’s proprietary indicia, trademarks, service marks, trade names, logos, symbols, or brand names, or (b) otherwise refer to or identify the Issuing and Paying Agen t in advertising, publicity releases, or promotional or marketing publications, or correspondence to third parties without, in each case, securing the prior written consent of the Issuing and Paying Agent.

[End of Issuing and Paying Agent Agreement for Series A-4 Water CP Notes (Subseries A-4 and Subseries A-4-T)]

[Signature page to Issuing and Paying Agent Agreement
Series A-4 Water CP Notes (Subseries A-4 and Subseries A-4-T)] S-1
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Issuing and Paying Agent
By:

Authorized Officer

PUBLIC UTILITIES COMMISSION OF THE

CITY AND COUNTY OF SAN FRANCISCO
By:

Dennis J. Herrera
General Manager
Approved as to Form:

DAVID CHIU
City Attorney of the City and
County of San Francisco
By:

Katherine Thursby Ortega
Deputy City Attorney
Acknowledged:

ANNA VAN DEGNA
Director of Public Finance of the City
and County of San Francisco
By:

Director of Public Finance

GREG WAGNER
Controller of the City and
County of San Francisco
By:

Controller

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EXHIBIT A-1

FORM OF WATER ENTERPRISE
SERIES A-4 COMMERCIAL PAPER NOTE

PUBLIC UTILITIES COMMISSION

OF THE CITY AND COUNTY OF SAN FRANCISCO

COMMERCIAL PAPER NOTES
(WATER SERIES, PROPOSITION E)
TAX-EXEMPT SUBSERIES A-4
Principal Sum : Not to Exceed $150,000,000 Outstanding When Combined With Taxable Subseries A- 4-T Notes
No.: Dated Date:

Principal Amount: Maturity Date:

Interest to Maturity: Number of Days:

Due at Maturity: Interest Rate (%):

Place of Payment: Payee:

The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (hereinafter called the “Commission”), for value received, hereby promises to pay (but only out of the Available Water Enterprise Revenues hereinafter referred to) to the Payee identified above, on the Maturity Date specified above the Principal Amount specified above and to pay interest , if any, on said Principal Amount at said Maturity Date from the Note Date specified above to said Maturity Date at the per annum Interest Rate specified above, if any (calculated on the basis of the actual days elapsed in a 365/366-day-year), upon presen tation and surrender at the principal corporate trust office of the Issuing and Paying Agent executing the Certificate of Authentication endorsed hereon and appearing below, or its successor at the principal corporate trust office of such successor. For payment of this Commercial Paper Note on the Maturity Date hereof, this Commercial Paper Note must be presented to the Issuing and Paying Agent no later than 2:15 p.m., New York City time, on such day. If a Commercial Paper Note is presented for payment after 2:15 p.m., New York City time, payment therefor shall be made by the Issuing and Paying Agent on the next succeeding business day without the accrual of additional interest thereon. The principal of and interest on this Commercial Paper Note are payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Payments shall be made solely from Available Water Enterprise Revenues and the Funds and Accounts (as those terms are defined in the Agreement referred to hereinafter) and payments of Drawings under an irrevocable direct pay Letter of Credit to the Payee identified above from the Issuing and Paying Agent.

This Commercial Paper Note is one of a duly authorized issue of San Francisco Public Utilities Commercial Paper Notes (hereinafter called the “Obligations”) of the series, subseries and designation indicated on the face hereof. Said authorized issue of Obligations is not limited in aggregate principal amount and consists of multiple series and subseries of varying denominations, dates, maturities, interest rates and other provisions, as in the Agreement hereinafter mentioned provided, all obligations issued and

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to be issued pursuant to the provisions of the Ch arter of the City and County of San Francisco, and all laws of the State of California supplemental thereto, including Article V of Chapter 43 of Part I of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted on June 8, 1998, by the Board of Supervisors of the City and County of San Francisco (the “Board”) and signed by the Mayor of the City on June 19, 1998, as amended, to establish a procedure for the Commission to issue commercial paper notes, and Ordinance No. 269-24, adopted on November 19, 2024, by the Board, and signed by the Mayor on November 25, 2024; Proposition E; and resolutions duly adopted by the Commission, including but not limited to Resolution No. 24-0193, adopted on September 10, 2024 and Resolution No. 25-[____], adopted on February 11, 2025. This Commercial Paper Note is part of a series of Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-4” which, when combined with the Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E), Taxable Subseries A-4-T,” is limited to $150,000,000 in aggregate principal amount. This Commercial Paper Note has been issued pursuant to the Issuing and Paying Agent Agreement (the “Agreement”), dated as of February 1, 2025, by and between the Commission and the Issuing and Paying Agent, which Agreement provides for the issuance of the Obligations. Copies of the Agreement are on file with and available for inspection at the offices of the Issuing and Paying Agent, at the above address, and at the offices of the Commission.

Reference is hereby made to the Agreement for a description of the terms on which the Obligations are issued and to be issued, the provisions with regard to the nature and extent of the Available Water Enterprise Revenues, as that term is defined in the Agreement, and the rights of the Payee; and all the terms of the Agreement are hereby incorporated herein and made a contract between the Commission and the Payee of this Commercial Paper Note, and to all the provisions thereof the Payee of this Commercial Paper Note, by its acceptance hereof, consents and agrees.

This Commercial Paper Note, including the interest hereon, together with all other Obligations, and the interest thereon, issued under the Agreement (and to the extent set forth in the Agreement), is payable from, and is secured by a charge and lien on, the Available Water Enterprise Revenues and the Funds and Accounts derived by the Commission from the Water Enterprise (as those terms are defined in the Agreement).

The obligation of the Commission to pay the Payee of this Commercial Paper Notes shall be only from Available Water Enterprise Revenues and the Funds and Accounts. No holder of this Commercial Paper Note shall ever have the right to compel any exercise of the taxing power of the City and County of San Francisco t o pay this Commercial Paper Note or the interest hereon.

At the request of the Payee, the Commission shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Commercial Paper Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Commercial Paper Note. This Commercial Paper Note is transferable by the Payee, in person or by attorney duly authorized in writing, at the principal office of the Issuing and Paying Agent in New York, New York, but only in the manner, subject to the limitations and upon payment of the charges provided in the Agreement, and upon surrender and cancellation of this Commercial Paper Note. Upon such transfer a new fully registered Commercial Paper Note without coupons, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor.

The Commission and th e Issuing and Paying Agent may deem and treat the Payee as the absolute owner hereof for all purposes, and the Commission and the Issuing and Paying Agent shall not be affected by any notice to the contrary.

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The rights and obligations of the Commission and of the Payee may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Agreement.

It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Commercial Paper Note, and in the issuing of this Commercial Paper Note, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California and the Charter of the City and County of San Francisco, and that this Commercial Paper Note, together with all other indebtedness of the Commission pertaining to the Water Enterprise, is within every debt limitation and other limit prescribed by the Constitution and statutes of the State of California and said Charter, and is not in excess of the amount of Obligations permitted to be issued under the Agreement.

This Commercial Paper Note shall not be entitled to an y benefit under the Agreement, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Issuing and Paying Agent. This Commercial Paper Note is a valid and binding obligation of Commission.

Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to such terms in the Agreement.

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IN WITNESS WHEREOF, the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO has caused this Commercial Paper Note to be executed in its name and on its behalf by its General Manager and countersigned by its Secretary, and the seal of said City and County to be imprinted or reproduced by facsimile hereon, and this Commercial Paper Note, all as of the Dated Date specified above.

PUBLIC UTILITIES COMMISSION OF THE

CITY AND COUNTY OF SAN FRANCISCO
By:

Dennis J. Herrera
[SEAL]
Countersigned
By:

Secretary

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CERTIFICATE OF AUTHENTICATION
This is the Commercial Paper Note described in the within -mentioned Agreement.

Date of Authentication: February 18, 2025
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Issuing and Paying Agent
By
Authorized Officer

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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto

_____________________________________________________________________________________ (Name, address, and Taxpayer Identification Number of Assignee) this Commercial Paper Note and all rights thereunder, hereby irrevocably constituting and appointing _________________________ attorney to transfer said Commercial Paper Note on the books of the Commission with full power of substitution in the premises.

NOTE: The signature to this assignment must
correspond with the name on the face of the within
registered note in every particular, without alteration or enlargement or any change whatsoever.

Dated:

Signature Guaranteed by:

NOTE: Signature must be guaranteed by an eligible
guarantor institution.

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EXHIBIT A-2

FORM OF WATER ENTERPRISE
SERIES A-4-T COMMERCIAL PAPER NOTE

PUBLIC UTILITIES COMMISSION

OF THE CITY AND COUNTY OF SAN FRANCISCO

COMMERCIAL PAPER NOTES
(WATER SERIES, PROPOSITION E)
TAXABLE SUBSERIES A-4
Principal Sum : Not to Exceed $150,000,000 Outstanding When Combined With Tax-Exempt Subseries A-4 Notes
No.: Dated Date:

Principal Amount: Maturity Date:

Interest to Maturity: Number of Days:

Due at Maturity: Interest Rate (%):

Place of Payment: Payee:

The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (hereinafter called the “Commission”), for value received, hereby promises to pay (but only out of the Available Water Enterprise Revenues hereinafter referred to) to the Payee identified above, on the Maturity Date specified above the Principal Amount specified above and to pay interest, if any, on said Principal Amount at said Maturity Date from the Note Date specified above to said Maturity Date at the per annum Interest Rate specified above, if any (calculated on the basis of the actual days elapsed in a 360-day-year), upon presentation and surrender at the principal corporate trust office of the Issuing and Paying Agent executing the Certificate of Authentication endorsed hereon and appearing below, or its successor at the principal corporate trust office of such successor. For payment of this Commercial Paper Note on the Maturity Date hereof, this Commercial Paper Note must be presented to the Issuing and Paying Agent no later than 2:15 p.m., New York City time, on such day. If a Commercial Paper Note is presented for payment after 2:15 p.m., New York City time, payment therefor shall be made by the Issuing and Paying Agent on the next succeeding business day without the accrual of additional interest thereon. The principal of and interest on this Commercial Paper Note are payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Payments shall be made solely from Available Water Enterprise Revenues and the Funds and Accounts (as those terms are defined in the Agreement referred to hereinafter) and payments of Drawings under an irrevocable direct pay Letter of Credit to the Payee identified above from the Issuing and Paying Agent.

This Commercial Paper Note is one of a duly authorized issue of San Francisco Public Utilities Commercial Paper Notes (hereinafter called the “Obligations”) of the series, subseries and designation indicated on the face hereof. Said authorized issue of Obligations is not limited in aggregate principal amount and consists of multiple series and subseries of varying denom inations, dates, maturities, interest rates and other provisions, as in the Agreement hereinafter mentioned provided, all obligations issued and to be issued pursuant to the provisions of the Charter of the City and County of San Francisco, and all laws

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of the State of California supplemental thereto, including Article V of Chapter 43 of Part I of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted on June 8, 1998, by the Board of Supervisors of the City and County of San Francisco (the “Board”) and signed by the Mayor of the City on June 19, 1998, as amended, to establish a procedure for the Commission to issue commercial paper notes, and Ordinance No. 269-24, adopted on November 19, 2024, by the Board, and signed by the Mayor on November 25, 2024; Proposition E; and resolutions duly adopted by the Commission, including but not limited to Resolution No. 24-0193, adopted on September 10, 2024 and Resolution No. 25-[____], adopted on February 11, 2025. This Commercial Paper Note is part of a series of Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Taxable Subseries A-4-T” which, when combined with the Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E), Tax-Exempt Subseries A-4,” is limited to $150,000,000 in aggregate principal amount. This Commercial Paper Note has been issued pursuant to the Issuing and Paying Agent Agreement (the “Agreement”), dated as of February 1, 2025, by and between the Commission and the Issuing and Paying Agent, which Agreement provides for the issuance of the Obligations. Copies of the Agreement are on file with and available for inspection at the offices of the Issuing and Paying Agent, at the above address, and at the offices of the Commission.

Reference is hereby made to the Agreement for a description of the terms on which the Obligations are issued and to be issued, the provisions with regard to the nature and extent of the Available Water Enterprise Revenues, as that term is defined in the Agreement, and the rights of the Payee; and all the terms of the Agreement are hereby incorporated herein and made a contract between the Commission and the Payee of this Commercial Paper Note, and to all the provisions thereof the Payee of this Commercial Paper Note, by its acceptance hereof, consents and agrees.

This Commercial Paper Note, including the interest hereon, together with all other Obligations, and the interest thereon, issued under the Agreement (and to the extent set forth in the Agreement), is payable from, and is secured by a charge and lien on, the Available Water Enterprise Revenues and the Funds and Accounts derived by the Commission from the Water Enterprise (as those terms are defined in the Agreement).

The obligation of the Commission to pay the Payee of this Commercial Paper Notes shall be only from Available Water Enterprise Revenues and the Funds and Accounts. No holder of this Commercial Paper Note shall ever have the right to compel any exercise of the taxing power of the City and County of San Francisco to pay this Commercial Paper Note or the interest hereon.

At the request of the Payee, the Commission shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Commercial Paper Note. As of the date any such note certificate or certificates are issued, th e obligations which are evidenced thereby shall no longer be evidenced by this Commercial Paper Note. This Commercial Paper Note is transferable by the Payee, in person or by attorney duly authorized in writing, at the principal office of the Issuing and Paying Agent in New York, New York, but only in the manner, subject to the limitations and upon payment of the charges provided in the Agreement, and upon surrender and cancellation of this Commercial Paper Note. Upon such transfer a new fully registered Commercial Paper Note without coupons, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor.

The Commission and the Issuing and Paying Agent may deem and treat the Payee as the absolute owner hereof for all purposes, and the Commission and the Issuing and Paying Agent shall not be affected by any notice to the contrary.

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The rights and obligations of the Commission and of the Payee may be modified or amended at any time in t he manner, to the extent, and upon the terms provided in the Agreement.

It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Commercial Paper Note, and in the issuing of this Commercial Paper Note, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California and the Charter of the City and County of San Francisco, and that this Commercial Paper Note, together with all other indebtedness of the Commission pertaining to the Water Enterprise, is within every debt limitation and other limit prescribed by the Constitution and statutes of the State of California and said Charter, and is not in excess of the amount of Obligations permitted to be issued under the Agreement.

This Commercial Paper Note shall not be entitled to any benefit under the Agreement, or become valid or obligat ory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Issuing and Paying Agent. This Commercial Paper Note is a valid and binding obligation of Commission.

Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to such terms in the Agreement.

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IN WITNESS WHEREOF, the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO has caused this Commercial Paper Note to be executed in its name and on its behalf by it s General Manager and countersigned by its Secretary, and the seal of said City and County to be imprinted or reproduced by facsimile hereon, and this Commercial Paper Note, all as of the Dated Date specified above.

PUBLIC UTILITIES COMMISSION OF THE

CITY AND COUNTY OF SAN FRANCISCO
By
Dennis J. Herrera
General Manager
[SEAL]
Countersigned
By:

Secretary

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CERTIFICATE OF AUTHENTICATION
This is the Commercial Paper Note described in the within -mentioned Agreement.

Date of Authentication: February 18, 2025
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Issuing and Paying Agent
By
Authorized Officer

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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto

_____________________________________________________________________________________ (Name, address, and Taxpayer Identification Number of Assignee) this Commercial Paper Note and all rights thereunder, hereby irrevocably constituting and appointing _________________________ attorney to transfer said Commercial Paper Note on the books of the Commission with full power of substitution in the premises.

NOTE: The signature to this assignment must
correspond with the name on the face of the within
registered note in every particular, without alteration or enlargement or any change whatsoever.

Dated:

Signature Guaranteed by:

NOTE: Signature must be guaranteed by an eligible
guarantor institution.

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EXHIBIT B-1

FORM OF SUBSERIES A-4 MASTER NOTE

Unless this certificate is presented by an authorized representative of The Depository Trust Company (“DTC”) to the Commission or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO. or such other name as requested by an authorized representative of DTC (and any payment is made to CEDE & CO. or to such other entity as is requested by an authorized officer of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since the Registered Owner hereof, CEDE & CO., has an interest herein.

PUBLIC UTILITIES COMMISSION

OF THE CITY AND COUNTY OF SAN FRANCISCO

COMMERCIAL PAPER NOTES
(WATER SERIES, PROPOSITION E)
TAX-EXEMPT SUBSERIES A-4
No. DTC Master Note 1
Registered Owner: CEDE & CO.

Principal Sum : Not to Exceed $150,000,000 Outstanding When Combined With Taxable Su bseries A- 4-T Notes
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (hereinafter called the “Commission”), for value received, hereby promises to pay (but only out of the Available Water Enterprise Revenues hereinafter referred to) to the registered owner hereinabove named or registered assigns, the principal amount, together with unpaid accrued interest thereon, if any, on the maturity date of each obligation identified on the records of Commission (the “Underlying Records”) as being evidenced by this Master Commercial Paper Note, which Underlying Records are maintained by U.S. Bank National Association, as Issuing and Paying Agent (the “Issuing and Paying Agent”). Interest shall be calculated on the basis of the actual number of days elapsed and a year consisting of 365 or 366 days, as applicable, at the rate specified on the Underlying Records. Payments shall be made solely from Available Water Enterprise Revenues and the Funds and Accounts (as those terms are defined in the Agreement referred to hereinafter) and payments of Drawings under an irrevocable direct pay Letter of Credit to the registered owner identified above from the Issuing and Paying Agent without necessity of presentation and surrender of this Master Commercial Paper Note.

This Master Commercial Paper Note is one of a duly authorized issue of San Francisco Public Utilities Commercial Paper Notes (hereinafter called the “Obligations”) of the series, subseries and designation indicated on the face hereof. Said authorized issue of Obligations is not limited in aggregate principal amount and consists of varying denom inations, dates, maturities, interest rates and other provisions, as in the Agreement hereinafter mentioned provided, all obligations issued and to be issued pursuant to the provisions of the Charter of the City and County of San Francisco, and all laws of the State of California supplemental thereto, including Article V of Chapter 43 of Part I of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted on June 8, 1998, by the Board of Supervisors of the City and County of San Francisco (the “Board”) and signed by the Mayor of the City on

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June 19, 1998, as amended, to establish a procedure for the Commission to issue commercial paper notes, and Ordinance No. 269-24, adopted on November 19, 2024, by the Board, and signed by the Mayor on November 25, 2024; Proposition E; and resolutions duly adopted by the Commission, including but not limited to Resolution No. 24-0193, adopted on September 10, 2024 and Resolution No. 25-[____], adopted on February 11, 2025. This Master Commercial Paper Note evidences a series of Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E) Tax-Exempt Subseries A-4” which, when combined with the Commercial Paper Notes designated as the “Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Water Series, Proposition E), Taxable Subseries A-4-T,” is limited to $150,000,000 in aggregate principal amount. This Master Commercial Paper Note has been issued pursuant to the Issuing and Paying Agent Agreement (the “Agreement”), dated as of February 1, 2025, by and between the Commission and the Issuing and Paying Agent, which Agreement provides for the issuance of the Obligation s. Copies of the Agreement are on file with and available for inspection at the offices of the Issuing and Paying Agent, at the above address, and at the offices of the Commission.

Reference is hereby made to the Agreement for a description of the terms on which the Obligations are issued and to be issued, the provisions with regard to the nature and extent of the Available Water Enterprise Revenues, as that term is defined in the Agreement, and the rights of the registered owners of the Obligations; and all the terms of the Agreement are hereby incorporated herein and made a contract between the Commission and the registered owner from time to time of this Master Commercial Paper Note, and to all the provisions thereof the registered owner of this Master Commercial Paper Note, by its acceptance hereof, consents and agrees.

This Master Commercial Paper Note, including the interest hereon, together with all other Obligations, and the interest thereon, issued under the Agreement (and to the extent set forth in the Agreement), is payable from, and is secured by a charge and lien on, the Available Water Enterprise Revenues and the Funds and Accounts derived by the Commission from the Water Enterprise (as those terms are defined in the Agreement).

The obligation of the Commission to pay the registered owners from time to time of Commercial Paper Notes shall be only from Available Water Enterprise Revenues and the Funds and Accounts. No holder of this Master Commercial Paper Note shall ever have the right to compel any exercise of the taxing power of the City and County of San Francisco to pay this Master Commercial Paper Note or the interest hereon.

At the request of the registered owner, the Commission shall promptly issue and deliver one or more separate note cer tificates evidencing each obligation evidenced by this Master Commercial Paper Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Master Commercial Paper Note. This Commercial Paper Note is transferable by the registered owner hereof, in person or by attorney duly authorized in writing, at the principal office of the Issuing and Paying Agent in New York, New York, but only in the manner, subject to the limitations and upon payment of the charges provided in the Agreement, and upon surrender and cancellation of this Master Commercial Paper Note. Upon such transfer a new fully registered Master Commercial Paper Note without coupons, of authorized denomin ation or denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor.

The Commission and the Issuing and Paying Agent may deem and treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Issuing and Paying Agent shall not be affected by any notice to the contrary.

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The rights and obligations of the Commission and of the registered owners of the Obligations may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Agreement.

It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Master Commercial Paper Note, and in the issuing of this Master Commercial Paper Note, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California and the Charter of the City and County of San Francisco, and that this Master Commercial Paper Note, together with all other indebtedness of the Commission pertaining to the Water Enterprise, is within every debt limitation and other limit prescribed by the Constitution and statutes of the State of California and said Charter, and is not in excess of the amount of Obligations permitted to be issued under the Agreement.

This Master Commercial Paper Note shall not be entitled to any benefit under the Agreement, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Issuing and Paying Agent. This Master Commercial Paper Note is a valid and binding obligation of Commission.

Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to such terms in the Agreement.